It can't calculate tax properly, so why is HMRC being given more power?

Michelle McGagh
Tax Rebate
Tax Rebate

HM Revenue & Customs (HMRC) has done it again, proved it can't be trusted to do the most simple of tasks and collect the right tax so why should it be trusted to raid people's bank accounts?

The latest blunder has seen HMRC incorrectly calculate the tax bills over over five million people. Those who were told they overpaid or underpaid tax last year may still owe or be owed money.

The errors were revealed in leaked emails and HMRC is, worryingly, unaware of the scale of the problem.

Article continues below

Complicated Tax System Blamed for Latest HMRC Blunders
Complicated Tax System Blamed for Latest HMRC Blunders

More power

The situation at HMRC is a shambles and it's ludicrous to think the taxman can't properly carry out the most basic of it roles. But what is more frightening is that these problems are happening just as the taxman is about the be afforded more powers to raid people's bank accounts for tax.

From next April the taxman will have the power to change tax codes for those they believe have underpaid income tax, national insurance or capital gains tax and take up to £17,000 from an individual's bank account to cover any shortfall. This figure has been increased from £3,000 and ensures the taxman can really get his hands on more of your money.

HM Revenue & Customs will be able to take up to £17,000 from pay packets – compared to the current limit of £3,000.

This adds to HMRC's already substantial power to take money from the bank accounts of those it believes are tax dodging without gaining permission from the courts.

The latest round of problems begs the question of why HMRC is allowed further power when it can't be trusted to perform its most basic of task correctly. If HMRC is raiding bank accounts based on it's own calculations, surely that's a recipe for disaster: miscalculate the tax owed but take the money anyway.

That is not the kind of uncertainty we need in the tax system. The recent miscalculations are thought to be on average £300 and while for many that may not seem like a huge about for others it is a substantial sum. I'm sure there will be many people for whom the prospect of a tax bill of £300 dropping on to the doormat will cause much anxiety.

The fact that HMRC is so blasé with the finances of others is proof enough that it should have its powers reined in, not be given more.

Read more:

HMRC can't be trusted with our bank accounts

Accountants warn on new HMRC money-grabbing powers

HMRC hands back £4 million to wronged taxpayers