The British tax authority is to be given the power to raid personal bank accounts for unpaid tax bills.
The change in the law was described in documents published in tandem with the Chancellor’s ‘summer’ Budget earlier this week.
HMRC claims that 17,000 “non-compliant individuals and businesses are likely to be affected by this measure each year”.
The new power allows HMRC to take unpaid tax from bank and building society accounts as well as tax shelters such as individual savings accounts.
But it won’t be able to access accounts held by parents on behalf of their children.
For joint accounts, HMRC “is introducing safeguards so that only a pro-rata proportion of the balance in a joint account will be affected”.
The law change will cost HMRC £800,000 to implement but is likely to raise millions of pounds. HMRC believes it will rake in a total of £470million between now and 2020, starting at £20million this year, rising to £110million, £130million, £115million and £95million in the following years.
HMRC said that it would only “take action against debtors who owe over £1,000 of tax or tax credits debt”. It would “always leave a minimum aggregate of £5,000 across debtors’ accounts and will only put a hold on the funds in the affected account up to the value of the debt”.
The change is yet to be formally debated by MPs and peers. Draft legislation will be published next week.
The proposal was slammed by small businesses.
John Allan, national chairman at the Federation of Small Businesses, said: “We're sceptical the tax risk and number of cases warrant giving HMRC such far reaching and comprehensive powers.
“We need an open debate about whether citizens are comfortable with such powers being in the hands of the UK tax authorities.
“The proposals come alongside a broad raft of new data collection measures allowing HMRC ever more power to pry directly into the affairs of citizens most of whom are trying to do the right thing.
“HMRC already has a clear legal route to making debtors pay, but the system requires HMRC to prove money is owed in court before being able to take it.
“The proposed new powers permit HMRC to take the money on its own say-so. Essentially it allows HMRC to play both judge and jury with little or no external oversight.
“In our view this undermines due process without independent, judicial oversight and is a step too far.”
