Concern over debt collection plans



An influential group of MPs has expressed alarm about plans for the taxman to be able to seize money direct from millions of personal bank accounts.

The cross-party Treasury Committee said it had "considerable concern" over Chancellor George Osborne's debt collection proposals, and called for further scrutiny.

In their report on this year's Budget, the MPs suggested the change could amount to a back-door reintroduction of the discredited Crown Preference rule - which gave HM Revenue & Customs (HMRC) priority access to assets when firms went bust.

"The proposal to grant HMRC the power to recover money directly from taxpayers' bank accounts is of considerable concern to the committee," the report said. "The committee considers a lengthy and full consultation to be essential.

"Giving HMRC this power without some form of prior independent oversight -for example by a new ombudsman or tribunal, or through the courts - would be wholly unacceptable."

The committee dismissed the Chancellor's argument that the Department for Work and Pensions (DWP) already had similar powers to collect child maintenance.

The MPs said: "The parallel is not exact: in those cases, DWP is acting as an intermediary between two individuals."

"HMRC would be acting not as an intermediary between two individuals but rather in pursuit of its own objective of bringing in revenue for the Exchequer."

They also highlighted the potential for fraud and error if the taxman was given direct access to millions of accounts.

"This policy is highly dependent on HMRC's ability accurately to determine which taxpayers owe money and what amounts they owe, an ability not always demonstrated in the past," the report said.

"Incorrectly collecting money will result in serious detriment to taxpayers.

"The Government must consider safeguards, in addition to those set out in the consultation document, to ensure that HMRC cannot act erroneously with impunity.

"These might include the award of damages in addition to compensation, and disciplinary action in cases of abuse of the power."

A spokesman for the Treasury said: "The Government's long-term economic plan is to reduce the deficit so that we deal with our debts.

"It is therefore important that people pay the tax they owe on time. Although the vast majority do this, there is still a minority that chooses not to pay, despite being able.

"The proposed powers will give HMRC another tool to collect tax debt owed. The current consultation includes a range of safeguards to ensure the power is tightly targeted."

The UK's bankruptcy hotspots by rate of insolvencies

The UK's bankruptcy hotspots by rate of insolvencies