HMRC to gain power to take money from bank accounts

Summarised from 2 outlets · Updated 24 Oct, 11:50 · Archive

The taxman will be able to automatically deduct payments from bank accounts without court orders to recover £4billion in unpaid debts.

The Chancellor is expected to announce in the Budget that HMRC will gain new powers to automatically deduct money from people's bank accounts to recover unpaid taxes. Under the proposals, the taxman would be able to take sums from current and savings accounts without obtaining a court order, targeting millions of individuals and businesses who owe relatively small amounts but have repeatedly ignored payment demands.

Currently, HMRC can only seize money directly from accounts if the debt exceeds £1,000 and the taxpayer has at least £5,000 remaining after recovery. Under the new measures, these thresholds would be dramatically reduced to as little as a few pounds. HMRC estimates that around 4.8million individuals and businesses owe less than £10,000 each, with their combined debts totalling £4billion. The average unpaid bill among individual taxpayers is £950.

Officials would also be empowered to recover accumulated fines and interest alongside the original liability. HMRC is considering using credit reference agencies to assess taxpayers' finances and determine how much they can afford to repay each month, with previous proposals suggesting deductions could be capped at 50 per cent of disposable income. The plans form part of government efforts to tackle Britain's £60billion tax gap.

Concerns have been raised that vulnerable people could have money taken from their accounts because of administrative errors, illness or missed correspondence. Taxpayers would be responsible for challenging deductions they believed were unjustified.

How it is being reported

• Labour gives taxman new powers to raid bank accounts in bid to recover £4billionChancellor John Healey is set to use next week's Budget to grant HMRC (HM Revenue & Customs) new powers to withdraw unpaid tax directly from people's bank accounts. The measures are designed to recoup approximately £4billion in outstanding debts owed by millions of individuals and businesses who have repeatedly failed to respond to payment demands. Under the proposed crackdown, HMRC would gain the ability to automatically take sums from both current and savings accounts, targeting those with comparatively modest outstanding liabilities, according to The Times. At present, the tax authority's…GB News · 24 Oct, 11:33
• Labour's Budget will give taxman sweeping new powers to take money straight from bank accounts of people failing to payThe taxman will be able to automatically deduct payments from current and savings accounts without obtaining a court order to attempt to recover £4billion in unpaid debts.Daily Mail · 23 Oct, 21:12

In this story: John Healey · HMRC · Britain

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