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Tax experts have applauded the government’s decision to water down controversial plans to give HMRC extra tax debt-collection powers.
Extra safeguards and additional time for consultation on direct recovery of debts (DRD) mean the measure will be delayed until after next year’s general election.
Tax experts have applauded the government’s decision to water down controversial plans to give HMRC extra tax debt-collection powers.
Extra safeguards and additional time for consultation on direct recovery of debts (DRD) mean the measure will be delayed until after next year’s general election.
DRD has been the cause of outrage since it was unveiled in May to give Revenue officials access to taxpayers’ bank accounts. Taxation’s campaign against the proposal earned media coverage for its petition, which had garnered 4,623 names at the time of writing.
Paul Aplin of AC Mole & Son opened Taxation’s drive in July, writing that “the only acceptable price [DRD] would be oversight completely independent of HMRC”.
The newly announced measures include guaranteed face-to-face contact between taxpayer and tax department before money is taken, a taxpayer’s right of appeal to the county court, and a triage process to identify vulnerable individuals and take them onto a separate track.
Aplin said the changes “put us in a completely different place”, adding, “We need to see the detail in the draft legislation, but the involvement of a court changes DRD fundamentally.”
Fresh safeguards will also drop the requirement for banks to provide 12 months of a debtor’s account history, and a taxpayer will 30 days to object to HMRC once debt recovery is initiated.
The chair of the Commons’ Treasury Committee, Andrew Tyrie MP, said, “There is a lot for parliament to scrutinise here. The committee made it abundantly clear earlier this year that prior independent oversight is essential.
“On the basis of the government’s consultation paper, it appears the proposed new right of appeal will take place before withdrawal of any money by HMRC. It also appears, however, that the money would be frozen, prior to any appeal. The committee will take a further look at the proposals. Safeguards for taxpayers are crucial.”
Professional bodies offered positive responses to the latest plans for DRD, with the head of taxation at the Association of Chartered Certified Accountants, Chas Roy-Chowdhury, describing them as “much better second time around… where we are today is light years better than what was originally proposed.”
Noting that legislation is likely to be in the Finance Bill immediately after the 2015 general election, Chartered Institute of Taxation president Anne Fairpo said, “We welcome this because it will ensure adequate time for debate” – and the Association of Accounting Technicians’ Adam Harper expressed “confidence that HMRC will have created a more robust and thorough policy that will tackle those who wilfully evade paying what they owe, while balancing the rights of the Revenue with those of the taxpayer.”
There was a note of concern from Anthony Thomas, president of the Low Incomes Tax Reform Group, who called for the improved safeguards to be set out in primary legislation.
“It is no good writing them only into guidance, because that can always be changed without reference to parliament,” he said.
