MPs baulk at HMRC’s demand to directly access taxpayers’ bank accounts

9th May 2014

HMRC is demanding to be granted powers which would allow it to take cash directly from taxpayers’ bank accounts.

HMRC in its consultation on the direct recovery of debts power as set out in the Budget, is seeking the ability to allow the Revenue to recover debts of over £1,000 directly from bank accounts, including Isas.

The House of Commons Treasury committee in its report on the 2014 Budget warns that giving HMRC such power without some form of prior independent oversight “would be wholly unacceptable” and having the ability to directly have access to millions of taxpayers’ bank accounts raises concerns about the risk of fraud and error.

READ MORE: Budget pension changes could lead to sale of defective products

HMRC has said the “direct recovery” powers could be used to take money from joint accounts. A formal consultation on the matter is currently underway.

Committee chairman Andrew Tyrie urged: “This policy is highly dependent on HMRC’s ability accurately to determine which taxpayers owe money and what amounts they owe, an ability not always demonstrated in the past. Incorrectly collecting money will result in serious detriment to taxpayers.”

The committee says that the Government must consider safeguards, in addition to those set out in the consultation document, to ensure that “HMRC cannot act erroneously with impunity”.

The Chancellor George Osborne argues that this measure can be justified because the Department for Work and Pensions already has the right to take money directly from people’s bank accounts to pay child maintenance.

However, the Treasury committee disputes this asserting that the parallel is not exact: in those cases, DWP is acting as an intermediary between two individuals. HMRC would be acting not as an intermediary between two individuals but rather in pursuit of its own objective of bringing in revenue for the Exchequer.

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