HMRC to acquire direct debt recovery powers

The Budget 2014 included an announcement regarding a move to ‘modernise and strengthen’ HMRC’s powers in relation to debt recovery, allowing direct access to taxpayer’s bank accounts to recover financial assets for the settlement of outstanding tax liabilities.  The new powers will bring the UK into line with other tax authorities already operating similar procedures in relation to tax debts, including France and the US.

A number of criteria are required to be met in order for HMRC to take such action, including:

  • An outstanding debt in excess of £1,000;
  • The taxpayer having the financial means to make payment;
  • An aggregate of £5,000 remaining in all bank accounts held by the taxpayer; and
  • A number of attempts made by HMRC to contact the taxpayer in relation to the debt.

Many have already expressed their concerns regarding incorrect amounts being taken from bank accounts and HMRC are keen to provide reassurance that the measures will only be utilised in cases where there is no dispute surrounding the debt, and that there will be  rigorous safeguards in place to prevent errors.

The Government are to consult on these measures shortly and the legislation is to be introduced under Finance Bill 2015.

Should you have a query regarding these proposed changes, or have an ongoing issue regarding outstanding payments to be made to HMRC, please contact the TaxDesk on 0845 4900 509 and ask for Isobel Clift.