Plan to let HMRC take tax debt straight from bank accounts under fire

MPs highlight potential for fraud, error and a back-door reintroduction of the discredited Crown Preference rule

An influential group of MPs has attacked a controversial Government plan that would allow the taxman to seize debt straight from the public’s personal bank accounts.

The cross-party Treasury Committee expressed “considerable concern” over Chancellor George Osborne's new proposals for tax collection, calling for far greater scrutiny over the plans.

In their evaluation of this year's Budget, the MPs suggest the new powers could mean 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 was dismissive of the Chancellor's argument in support of the scheme that the Department for Work and Pensions (DWP) currently has similar powers to collect child maintenance, concluding that the “parallel is not exact”.

“In those cases, DWP is acting as an intermediary between two individuals,” the MPs said. “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.”

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Home Care / Support Workers

£7 - £10 per hour: Recruitment Genius: This care provider is looking for Home ...

Recruitment Genius: Web Team Leader

£30000 - £35000 per annum: Recruitment Genius: One of the UK's leading web des...

Recruitment Genius: Client Manager

£27000 - £35000 per annum: Recruitment Genius: A growing, successful, friendly...

Recruitment Genius: Property Negotiator - OTE £20,000+

£16000 - £25000 per annum: Recruitment Genius: This family owned, independent ...

Day In a Page

Greece says 'No': A night of huge celebrations in Athens as voters decisively back Tsipras and his anti-austerity stance in historic referendum

Greece referendum

Greeks say 'No' to austerity and plunge Europe into crisis
Ten years after the 7/7 terror attacks, is Britain an altered state?

7/7 bombings anniversary

Ten years after the terror attacks, is Britain an altered state?
Beautiful evening dresses are some of the loveliest Donatella has created

Versace haute couture review

Beautiful evening dresses are some of the loveliest Donatella has ever created
No hope and no jobs, so Gaza's young risk their lives, climb the fence and run for it

No hope and no jobs in Gaza

So the young risk their lives and run for it
Fashion apps: Retailers roll together shopping and social networking for mobile customers

Fashion apps

Retailers roll together shopping and social networking for mobile customers
The Greek referendum exposes a gaping hole at the heart of the European Union – its distinct lack of any genuine popular legitimacy

Gaping hole at the heart of the European Union

Treatment of Greece has shown up a lack of genuine legitimacy
Number of young homeless in Britain 'more than three times the official figures'

'Everything changed when I went to the hostel'

Number of young homeless people in Britain is 'more than three times the official figures'
Compton Cricket Club

Compton Cricket Club

Portraits of LA cricketers from notorious suburb to be displayed in London
London now the global money-laundering centre for the drug trade, says crime expert

Wlecome to London, drug money-laundering centre for the world

'Mexico is its heart and London is its head'
The Buddhist temple minutes from Centre Court that helps a winner keep on winning

The Buddhist temple minutes from Centre Court

It helps a winner keep on winning
Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate