David Cameron was hit by a Conservative backlash today over moves to allow HM Revenue and Customs to seize unpaid taxes direct from personal bank accounts.
The Prime Minister insisted it was right to pursue every method of recouping money that was owed by debtors, warning that the alternative was to raise tax.
The anger grew after an all-party Commons committee of MPs warned of its “considerable concern” over the plans which were set out in Chancellor George Osborne’s Budget.
Critics warned that thousands of people would be wrongly targeted because of mistakes by HM Revenue and Customs (HMRC).
The Tory MP Douglas Carswell attacked the moves as “un-Conservative and illiberal”. He protested: “Given that HMRC freely admits that millions of people are routinely charged the wrong amount of tax, surely it would be insane to give them the power of what they call ‘direct recovery’.”
Eamonn Butler, the director of the right-leaning Adam Smith Institute, denounced the plans as “a fundamental assault on the rule of law”. He said: “Next year is the 800th anniversary of Magna Carta, but the basic civil protections it gave citizens against arbitrary power are being systematically eroded. Governments have become elected dictatorships.”
Jonathan Isaby, the chief executive of the Taxpayers’ Alliance, said: “In the context of a trillion-pound debt mountain, the risks of ordinary taxpayers having their pockets wrongly picked by HMRC far outweighs the potential additional revenue.”
Nigel Farage, the Ukip leader, attacked the scheme as “appalling” and said: “It mustn’t be allowed to happen.”
Under Mr Osborne’s plans, HMRC will be allowed to gain access to money held in a debtor’s bank or building society account - including joint accounts and Isas - without needing to apply for a court order. It says around 17,000 people will be targeted a year and only after they have ignored several demands to produce unpaid tax.
The cash will not be taken under the plans unless it still leaves the debtor with at least £5,000.
The strength of the anger over the proposals will pile pressure on the Treasury for a rethink, but David Cameron was unrepentant over the principle. He told Sky News: “If we don’t collect taxes properly and make sure people pay their taxes properly, we look at the problem of having to raise tax rates. I don't want to do that, so I support the changes that the Chancellor set out in the Budget, which is to really say that not paying your taxes is not acceptable.
"I’m sure the Treasury will look very carefully at the detail, but it's very clear that they can only do this if it’s a debt of over £1,000, they can only do it if there’s £5,000 or more in the account after this has been completed.”
The anger came after the Treasury select committee said: “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.
It added: “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.