Taxman gets power to raid paycheques

New powers allowing HM Revenue & Customs to deduct £2,000 a year from taxpayers' salaries to recover tax debts could cause many taxpayers financial hardship and leave other creditors out of pocket, the accountancy group UHY Hacker Young has warned.

Currently, Revenue and Customs must obtain taxpayers' consent or a court order before it can deduct money owed to it directly from taxpayers' salaries. But under the Finance Bill, expected to become law in a few weeks, it will not need a court's permission to take up to £2,000 a year through PAYE when it believes tax has been underpaid. Roy Maugham, a tax partner at UHY Hacker Young, is worried Revenue and Customs now has too many powers which could, if overused or wrongly applied, hurt many taxpayers.

"After mortgage payments, food and energy bills, a lot of taxpayers have little left over every month. What's going to stop HMRC making deductions from taxpayers' salaries that leave them unable to pay utility bills or service other creditors? Other creditors can't just deduct money from people's salaries on a whim.

"When you think of the administrative errors that led to millions in tax credits being paid incorrectly, you have to wonder whether there ought to be stronger safeguards before HMRC is granted unfettered access to taxpayers' paycheques."