Regulation  

HMRC to gain powers to grab money from accounts

HMRC to gain powers to grab money from accounts

Revenue & Customs will be given powers to reach into savers’ bank accounts and take money which is owed in tax, according to documents released in the Budget on 8 July.

The measure will allow HMRC to ensure payment of tax and tax credit debts directly from debtors’ bank and building society accounts.

The measure is listed in the 124-page document called Overview of Tax Legislation and Rates and will come into effect when the Summer Finance Bill – published on 15 July – is passed, probably in late October after the party conference recess.

Article continues after advert

It states: “This measure will modernise HMRC’s debt collection powers by introducing a power to recover debt directly from cash held in the bank and building society accounts in credit of debtors who have the means to pay but choose not to do so.”

Under its powers, HMRC will only be able to reach into accounts which have a minimum of £5,000 in them and it must leave a minimum of £5,000 behind across all the debtor’s accounts.

In 2015/16 HM Treasury estimates this will generate an extra £20m, rising to £120m in 2017/18.

Meanwhile, the number of raids on premises carried out by HMRC in the course of investigations into tax evasion has increased by almost a fifth, rising from 500 in 2013/14, to 593 last year, according to Pinsent Masons.

Adviser view

Mike Pendergast, a financial adviser with Cheshire-based Zen Financial Services, said: “Obviously, if tax is owed to HMRC it should be paid, but I cannot see how this bank-account grab would work in practice.

“People may have several accounts and some of these may be joint accounts.”