Outrage went up a notch this week over HMRC plans set out in the Budget to recover unpaid tax directly from bank accounts without a court order.
The Commons Treasury Committee today put a spotlight on the proposed “draconian powers” in its report into the Budget, and pointed out HMRC’s history of mistakes.
The committee said taxpayers could suffer “serious detriment” if officials are able - either by mistake or through an abuse of power - to take money from people who have done no wrong.
“The ability directly to have access to millions of taxpayers’ bank accounts raises concerns about the risk of fraud and error,” the report said. “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 tax authority's consultation document says officials will have an automatic power to take money from a bank account when the holder has failed to act on four formal warnings requiring payment.
HMRC said only people who owe more than £1,000 would face the confiscation of money from bank accounts, and only if they would have at least £5,000 left in the account afterwards.
The Revenue also admitted that up to 17,000 people a year would be targeted under the new measures bringing in an extra £100m a year.