Access to Taxpayers Bank Accounts by the Tax Office

General

Following considerable concerns expressed by the profession and other bodies representing taxpayers concerning the proposals to allow the tax office to raid taxpayers’ bank accounts, the government has recently announced significant safeguards in these proposals. Whilst these do not answer all of the concerns, they will provide additional protection to the taxpayer. The proposed modifications are as follows:

  1. Previously, the taxpayer could be targeted where the only contact was in writing. The new proposals require there to be a face to face meeting between the tax office and the taxpayer to ensure that the tax debt is actually due.
  2. Steps will be taken to identify vulnerable taxpayers and they will not be subjected to the direct recovery process.
  3. Before any recovery proceedings are taken, the taxpayer will initially have a right to request an internal review by HMRC. Previously, the taxpayer had 14 days to request this review. This has now been increased to 30 days.
  4. Additionally, there will now be a further right of appeal to a county court before money is actually taken from the account
  5. The proposal to ask for twelve months’ bank details has now been dropped
  6. The proposals will be framed so that Crown preference is not restored ‘through the back door’ in the event of insolvency proceedings.
  7. The Government has undertaken that legislation will not be pushed through in any “wash up” Finance Act passed before the election, but will instead be included in a Finance Bill introduced in the new Parliament.
  8. The introduction and operation of the new power will be subject to oversight and HMRC will report on it annually in a manner to be decided.

These new powers would be called theft if they were yielded by anyone other than the politicians and are not welcomed by anyone other than the tax office and their customer, the government. However, they bring the UK into line with much of Europe and the USA and opposition was unlikely to succeed. Therefore, these modifications provide at least an additional degree of protection against both the abuse of these powers by the tax office as well as the inevitable errors that will be made.