Keep your hands out of our bank accounts

Plans to give HM Revenue and Customs the power to raid bank accounts will erode any remaining goodwill



Even if Her Majesty’s Revenue and Customs (HMRC) were infallible, a power to raid an individual’s bank account to pay a tax debt would be quite a frightening one. It is wrong that any executive agency, including HMRC, should be able to sequester funds as an administrative matter, in this case on the judgement of a tax inspector, however scrupulous that individual may be.

As the Treasury Select Committee has pointed out, independent oversight of such action has to be part of the process. At the very least, HMRC should require a court order or the ruling of a tribunal, and this should be granted only when all else has failed. The taxpayer must be allowed to put their side of the story, and ample opportunity should be afforded them to pay their tax arrears without undue hardship.

This principle of fairness should also apply more broadly to the penalties and interest charged on late payments. At the moment these are needlessly draconian, and on a scale that would make even the most avaricious payday lender blush.

Moreover, we all know, sometimes from bitter personal experience, that HMRC is far from infallible. The word “blunder” is bracketed with “HMRC” in far too many newspaper headlines, whether it is comprehensive miscalculations affecting millions, the loss of masses of personal data, or the distress caused by absurdly inflated tax bills visited upon taxpayers with the sole aim of frightening them into paying up.

Telephone calls from tax officials on a weekend threatening court action in the absence of immediate payment are not unknown. Tax inspectors, like journalists and parking wardens, have never been popular with the general public, and much of the vitriol directed at them is obviously unfair – and all the more reason why HMRC officials have to err on the side of compassion and use their already extensive powers with great care, lest they appear sadistic.

The truth, of course, is that the taxpayer and modern reliable software do much of the work that the HMRC inspectors used to do. “Self-assessment”, now some two decades old, replaced a system whereby the inspector rather than the individual taxpayer worked out how much tax was owed.

This huge transfer of the burden of tax calculation from the state to the citizen was not accompanied by any concomitant sense of humility on the part of the Revenue. And though it’s the fault of successive chancellors rather than civil servants, the complexity of the tax system makes calculating the correct bill harder than it has ever been.

Indeed, experts in the field such as the Chartered Institute of Taxation have long pointed out the anomalies and costs to business that such Byzantine rules represent. Certainly, no chancellor since Nigel Lawson left office back in 1989 has declared rationalisation, tax neutrality, simplification and the abolition of outdated taxes and rules to be their priority.

Tax complexity has left individuals and businesses with unnecessary worry, created scope for honest mistakes and benefited no one outside the legal and accountancy professions. Not very much has been heard recently from the current Office of Tax Simplification.

Everyone should pay their taxes, and the Government has to have the means to punish those who break the law, and to secure its revenues. There is perhaps more avoidance, evasion and smuggling going on than there has been for centuries. HMRC should, as a final sanction, have the right to gain access to bank accounts, but only with the agreement of at least one independent, and judicial, authority.

Without that, any remaining goodwill the public feels towards HMRC would finally evaporate.

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