HMRC’s bank raiding powers

HMRC’s bank raiding powers

George Osborne announced a proposed new system during the 2014 Budget that would allow HMRC to seize assets from anyone that owes more than £1,000 in tax or tax credits.  That in itself isn’t really anything new, HMRC can already seize property or cash if they go through the Courts, but these changes would allow HMRC to simply to take money from a taxpayer’s bank account with no Court approval!

HMRC, who say they lose £35 billion a year by cheats who refuse to pay their taxes or find ways to avoid them, have stated:

“Most people pay their taxes on time, but a minority do not and some refuse to engage with us at all. It is wrong that this should hand an advantage to those who simply dodge their obligations, and is unfair on the vast majority who pay their taxes in full and on time,” he said

“We will shortly be consulting on a new measure with appropriate safeguards to help level the playing field, and tackle those who have the means to pay but are choosing not to. These are people who have, on average, over £20,000 in their accounts but are refusing to pay their debts.

“This will only affect a tiny number of debtors whom we have contacted a minimum of four times to ask for payment.”

Details of what the safeguards will be have not been released, but we do know that HMRC will have to leave a minimum balance of at least £5,000 across all bank accounts.

Frank Haskew, head of the tax faculty at the Institute of Chartered Accountants in England and Wales, says “it is a fundamental tenet of our English law and our democratic society that money cannot be grabbed from somebody’s account without a judge agreeing to the move”.

He said the change, which could come into force in just 12 months’ time, would be “unprecedented in the UK”.

And that: “At the end of the day, we can’t have HMRC as judge and jury on this.”

Mr Haskew also highlighted the fact that HMRC have a long track record of making mistakes and harassing innocent taxpayers – something that sadly most accountants will have seen first-hand.

Finally, this change would effectively see HMRC reinstated as a preferential creditor, a status that was removed from them in 2003, thus violating insolvency law.

Thankfully these new powers are not yet law, but are subject to Consultation.  With the ACCA calling the measures “seriously draconian” we can hope that they won’t become law without a fight, but with similar systems are already in place in countries such as France and the US it may be a forgone conclusion…….

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.

What can we expect in the 2014 Budget?

What can we expect in the 2014 Budget?

Spring is finally on the way and that must mean that it’s nearly Budget time!

The Budget is the annual statement made by the Chancellor of the Exchequer, on behalf of the Government, to set out spending plans for the year ahead.  It also announces details on any new tax rates and bands, along with changes to any existing taxes.  Any increases (or decreases!) on duties are included too, on items such as beer, spirits, cigarettes and petrol.

The Chancellor will make his Budget speech on 19 March 2014, but there are a few things that we already know will be announced thanks to the Autumn Statement last year.  Some of these will no doubt be of interest to our readers.

  1. The normal tax code limit will increase to £10,000, for those under 65.
  2. The basic rate band decreases from £32,010 to £31,865.
  3. The new Employers Allowance will be available, allowing small employers to save up to £2,000 a year in Employer’s National Insurance.
  4. The benefit in kind limit on a beneficial loan increases from £5,000 to £10,000.
  5. Beneficial loan interest in decreasing for the first time in 4 years, from 4% to 3.25%.
  6. The annual pension limit decreases from £50,000 to £40,000, and the lifetime limit decreases from £1.5million to £1.25million.
  7. The ISA allowance for the year increases from £11,520 to £11,880, of which half can be cash.
  8.  The junior ISA limit increases from £3,720 to £3,840.
  9. If you own a property that you’ve rented and are intending to sell the last 18 months will be an exempt period for Capital Gains Tax purposes – this was previously 36 months.
  10. The recovery of Statutory Sick Pay (SSP) is abolished.

We are also expecting final legislation covering offshore intermediaries and possibly the introduction of onshore intermediaries’ legislation covering specifically agency workers. There could also be personal service company announcements connected with the House of Lords committee hearings on IR35. So this could be an interesting Budget.

Intouch will be issuing a full budget summary to our clients shortly after the speech, along with an analysis of how it may affect you.

 

This blog has been prepared by Intouch Accounting. While we have made every attempt to ensure that the information contained in this blog has been obtained from reliable sources, Intouch is not responsible for any errors or omissions, or for the results obtained from the use of this information. This blog should not be used as a substitute for consultation with professional accounting advisers. If you have any specific queries, please contact Intouch Accounting.