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Glasgow
+44 (0)141 221 2984

Edinburgh
+44 (0)131 225 6366

Stirling
+44 (0)1786 451745

Dumbarton
+44 (0)1389 765238

Hamilton
+44 (0)1698 459444

French Duncan

Debt recovery proposals are cause for concern

15 September 2014

ICAEW has called for HMRC to scrap the planned introduction of new direct debt recovery powers stating that the procedure is “unconstitutional” and “wrong in principle”.

The plans, set out in the Finance Act 2014 2014, would allow HMRC to deduct tax owed directly from the accounts of debtors, providing at least £5,000 is left across all their accounts including NISAs. It is estimated that around 17,000 taxpayers will be affected each year.

ICAEW is against the proposals which it says fail to meet the criteria of being “fair, proportionate and accompanied by robust safeguards”. It raised concerns over a lack of independent judicial oversight of the powers in its response to a Government consultation on the controversial proposals.

“It is necessary to go back a step, to re-think the policy and consult upon the strategies by which HMRC can tackle those who willfully refuse to pay,” the Institute said. It added that it was unconvinced the powers are necessary given the range of tools at HMRC’s disposal.

ICAEW are not the only campaigners who are voicing their concern. The Low Incomes Tax Reform Group (LITRG) said that the proposal would inflict disproportionate financial and human cost on vulnerable taxpayers. The Association of Chartered Accountants (ACCA) also voiced concerns, arguing that HMRC’s attempts to extend its powers risk being unconstitutional.

HMRC responded to the concerns by stating that only those with an average of £20,000 in the bank and an average debt of £5,800 would be affected, saying that you can avoid this issue by paying your tax.

If you would like any further information, please contact us by email or call 0141 221 2984.