Part of the Chancellor’s recent Budget included plans to recover tax owed to the Treasury direct from the debtor’s bank account — all done directly and without a Court Order being necessary. This has been criticised widely but HMRC says that only 17,000 people in the UK per year would fall into this potential scenario and that it would only occur for those owing more than £1,000 in unpaid tax or tax credits owed. Moreover they say that they would only target long-standing tax debts from those who had received a minimum of 4 payment demands and whose bank and savings accounts combined had a minimum total balance of £5,000 or more remaining after any tax bad been directly seized. Also the debtor involved will have been issued with a final warning period of 14 days, during which the funds concerned would be frozen, before any tax was directly withdrawn.
Meanwhile many, including the Treasury Committee, have raised concerns by stating that it is well-known that HMRC make mistakes including, for example, sometimes asking for the wrong amount of tax from people, issuing incorrect tax cards, or worse. Similar mistakes applied through the new ‘Direct Recovery’ of tax from bank and savings accounts could be seriously detrimental to people and simply correcting any mistakes later on by paying back amounts overcharged would be “unacceptable” according to the committee’s Chairman, Andrew Tyrie, when speaking on 9 May.
We’ll be watching this issue as it unfolds but rest assured that Taxfile are always here to help those whose tax affairs are perhaps in a bit of a mess or where the tax situation simply needs to be clarified or tidied up. We can advise where necessary and deal with the HMRC on behalf of our clients every day, so we’re in an excellent position to help avoid situations like the above. Contact us here for more details or book an appointment with one of our tax advisors and accountants – the first 20 minutes are free for new customers, without obligation.