Elizabeth Colman
We've made some changes
to The Sunday Times
The taxman is seeking the power to plunder the bank accounts of both individuals and companies to recover unpaid taxes. The proposal would allow HM Revenue & Customs to freeze taxpayers’ bank accounts or deduct directly from salaries without first obtaining a court order.
Under the existing system, HMRC must ask a magistrate or county court to order that money can be taken from a bank account or salary. The taxpayer is given the opportunity to appear in court to defend their case.
Tax experts yesterday said that the proposal was a significant extension of the Government’s powers.
The British Bankers’ Association also expressed concerns with the plan. A spokesman for the BBA said: “Banks will need assurance that HMRC has gone through due diligence processes, that they’ve got the right person, and assessed potential hardship. Our main concern is, if you remove the courts who is going to be the independent arbiter?”
Neil Tipping, an accountant at CCH, the fee protection service, said that the proposal amounted to a move by HMRC to gain “preferential creditor” status, which it does not have. He said: “Businesses may have other creditors, such as small suppliers, who need to be paid. This move could send thousands of small businesses to the wall.”
The proposal, open to public consultation until September 17, will allow HMRC to freeze funds held in the taxpayer’s bank or building society account while making “other attempts to collect the debt”. Where those attempts proved “fruitless”, the money would be paid to HMRC by the bank or building society.
Mike Warburton, of Grant Thornton, the accountants, said that the proposal was a further move away from the “presumption of innocence” historically given to taxpayers. “This shifts the balance of power away from the taxpayer and in favour of the Government,” he said.
The paper states that taxpayers would be informed “immediately” that their funds had been frozen and would then be given the chance to provide evidence of hardship. Taxpayers would still have the right to appeal to the court “if HMRC did not accept that freezing the asset would cause hardship”.
Chris Oates, tax partner at Ernst & Young, the accountants, said: “This is a clear and significant extension of the Revenue’s powers.”
An HMRC spokesman yesterday said that 88.5 per cent of self assessment taxpayers paid taxes on time and the proposals only applied to “chronic latepayers”. The withdrawal would not show up on the taxpayer’s credit record.
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I have just heard that our bank account in Portugal - where we live - has been frozen. Apparently it is because of an unpaid tax bill from 2003 for 700 euros - about which we knew nothing. We all seem to be sitting back and allowing basic human rights to disappear - without a fight. We are an entirely innocent family being bullied, in a country which is perceived
to be a democracy, but which is actually rapidly turning into a dangerous state run horror.
Melissa Vero, Tavira, Portugal
Is this the thin end of a wedge, why not automatically deduct council tax, water rates, gas and electric bills, parking fines, fines for transgressing recycling laws, ... who knows what else. What? You have a mortgage to pay, food to buy, and transport costs. Get your priorities right!
The answer is simple. If this legislation goes through, don't keep any significant amount of money in any UK bank. (I presume the Government will not have the power to raid your French, Spanish, German, Dutch, or Swiss accounst, even though they now have a right to know how much is in them).
Tom, Chorley, Lancashire
Crazy ideas are good for any system... but if this scheme gets implemented it would be a disaster. In fact I dare say that if it is made law - the disaster has happened already!
Jim, Bethpage, USA / New York
Hmmm...the British taxman can dip into citizen's accounts without a courrt order. Reminds one of the Spirit of '76. Such govt. behavior is the stuff revolutions are made of...How this can even be considered escapes a Yank like me
James Buscher, st paul, mn/usa
As a pensioner I dont care if government dip into my bank account........blood and stones comes to mind. What I do care about is that they should have the right to do so without reference to the law. Brown should remember an election is close at hand.
mike gee, bournemouth, uk
Remind me, what is the difference between Communism and Capitalism?
Dave Sellick, Woking , Surrey
I consider for the Tax Authorities to have this power would be a disgraceful abuse of process. Whilst they may consider they are owed money by someone, this may in fact be under dispute. Why should they have the right to seize the money first by being able to help themselves trom your bank account.
I used to think that we lived in a democraticf society in this country
Dave Humphrey, Cinderford, Gloucestershire
This government nailed its colours to the mast at the beginning of its first term when it allowed the 'city' to self regulate itself. If that's not feathering your own nests for the future I don't know what is. Since then it has systematically looked after its own interests. at the expense of everything else. Why would things change now? Well, you can always vote with your feet, actually or metaphorically in the voting booth!
P. Kelly, Beverley, UK
George Orwell was right about a nightmare future which leaves the individual feeling completely powerless against the state. Whilst the politicians vote themselves huge amounts of income and expences and the best pension system probably in the world, many citizens have had their incomes and pensions decimated by higher taxation and corrupt regulation.Now they want to dip into our bank accounts directly to pay them and for their many failed policies.
Newton, Liverpool, england (with a small 'e')
What a terrifying thought. The civil liberties & protections afforded to us by our own justice system further eroded by an inadequately run government department.
i wonder, in the event that this abuse of human rights is actually given life and the countless mistakes & injustices that will undoubtably arise are discovered, will the Revenue repay the monies not due to them at the same level of interest that they charge for late payment of tax?
Will the Revenue be prepared to pay compensation to the poor indiviuals they have stolen from?
i suspect not! - the concept is utterly horrifying
G Burns, Manchester, UK
Quite frankly this is not a surprise as the government gets more forceful on collecting monies they belive are owed to them. I think this newspaper along with the whole press should immediately tackle this government as well as all members of Parliment on the issue of MP's expenses. I believe that MP's pay themselves a low salary then claim monster amoounts as expenses for which tax is not payalbe upon. This is in essence one rule for them and one rule for all others so it is high time MP's were paid more upfront and taxed on this then as voters we could really see who provides value.
Laurie Fraser, Beckenham,
This type of proposal signifies the weakness of the main Opposition political parties in Britain.
In the last general election, Labour won about 9 million votes, representing 15% of the British population. Hardly a mandate to govern, never mind a mandate to introduce draconian legislation.
Peter, London,
Welcome to the new social order of modern serfdom.
What this means is that the threat of this new power will be another means to keep the general population in control.
Beware joined-up databases.
CLIVE, London,
This is an outrageous move not only placing HMRC beyond the Rule of Law but does not take account of their own manifold errors and mistakes. By their own admission HMRC are overworked, understaffed and under-resourced. What protection is offered to the ordinary tax payers against HMRC's own shortcomings?
andy peters, sudbrook,
I work as a IT contracter and until a few years ago and like most contracters ran my business through a limited company.
The government brought out tax legislation called IR35 this allowed them to take tax and NI on 95% of the companies turnover rather than the actually income of the person.
The argument that the HM Revenue & Customs used was that because a person carried out work for customers then they were effectively an employee of those customers.
This is one of the most crooked and perverted pieces of tax legislation ever devised by the government.
Contractors would argue that they were not employees of the customer but were always stone walled by the Inland Revenue and were forced to pay extra tax and NI regardless of the many valid arguments by contractors.
Some contracters took the expensive course of going to court to argue their case and in some cases won.
These tax proposals are designed to make it easier for the government to run their crooked tax schemes like IR35.
Stephen Matthews, Newbury, Berkshire
This is a step too far, as a legitimate business man I applaud any action that will lead to people paying the correct amount of tax on their earning/income. I do not accept that the Revenue have preferential treatment over any one else, that "right" was abolished by this government sometime in the last year or so.
I am now convinced that I should look at moving my businesses out of the UK and into another European country, such as Spain, where business is treated far better. This Government ought to remember that we don't actually need them but they need us to generate tax revenues and employment for the citizens they are there to represent!!
Graham Ellis, Southampton, UK
This disgraceful proposal is utterly incompatible with the traditional liberties of British people. In allowing the government to help itself to our money, without the slightest check or balance, it is the financial equivalent of removing the right to trial. (Oh yes, that's right - they're trying to do that too). Nearly 800 years ago, King John got into trouble for this kind of high-handedness with his subjects' property, leading to Magna Carta. Over 350 years years ago, King Charles I faced armed rebellion and was eventually beheaded, largely because he too helped himself to people's assets without proper legal process. The American colonies rebelled and won their independence because they felt the government in London was unfairly taxing them. Yet today we are faced with renewed attacks on our most basic rights and freedoms - and, what's more, from a government that continually prates about human rights. It's a pity Parliament is no longer on our side!
Tom Welsh, Basingstoke,
It "will not show up on your credit report" but all the direct debits that subsequently fail will!
Christopher Powell, London,
This is another event in a sequence which makes me increasingly minded to emigrate or become non-resident. New Labour has no comprehension of, or liking for constitutional rights because it believes it knows best for us all. Be afraid, very afraid. Hysterical? Maybe, but safety first....
Andy, London, UK
When is the Government going to apply the same tax rules as it does to the rest of us, to the many thousands of people living in the UK who claim "non domicile" tax status? Some have lived in the UK for decades, and have greater tax advantages than people born in the UK - e.g. they can avoid completely paying capital gains tax. Anyone not born in the UK but living here can claim this tax concession - and many wealthy donors to all the main political parties claim "non-domicile" status. Is there a connection between their political donations and their continuing favourable tax treatment as "non-domiciles"? The UK is the only country in the world that taxes its born-and-bred citizens less favourably than foreigners who move into the country.
Don Alderton, Chester, UK
This is yet another case of the government extending its power over the individual. When are we going to wake up to the fact that democracy is under attack.
Gordon Walkley, London,
Having checked many people's tax assessments, I know that the revenue make many mistakes and they never apologise when their mistakes are admitted by them. Tax advisers have to waste a lot of time because of such mistakes which the taxpayer has to suffer. I am certain that they will make mistakes and raid wrong person's money. I also know that the tax system is so complicated that even the experts make mistakes and the govenment despite promises, has not made it simpler.
Pralay James, London,
It actually doesn't affect me but I still think it is outrageous and should be stopped.
Allan Paterson, Knutsford, UK
The Revenue make many, many mistakes and a very many tax demands are wrong. We need an independent review of any Revenue demand for that reason alone, as well as on grounds of principle.
Frank Upton, Solihull,
Welcome to the last bastion of Socialism in the 21st century. What next, Cumbria as a gulag filled with people the Government has decided it doesn't really like? Can we freeze the funds of the Treasuy and split them up amongst ourselves, on the basis that the tax regime in the UK is far too punitive?
First, the Government removes the right to remain silent, now it is also removing another part of the presumption of innocence until proven guilty. This stupid rule means they will just take cash from anyone, regardless of whether they are the correct person or not. There are no national insurance numbers attached to bank accounts, so how are they to decide if they have the right person or not?
Maybe if they simplified the grossly complicated and onerous system and made it far less punitive, people would be able to calculate their correct liability and make sure they can pay it - then the Treasury wouldn't have to just steal the cash back.
Neil J, Derbyshire, England
This is yet another example of the erosion of liberty that has bee steadily occuring in the UK during the present governmet's tenure. Along with the widespread use of CCTV, as well as other more covert surveillance, this government now presumes that we are all guilty unless we can prove our innocence. Finally, nowhere in this article is there a statement as to exactly why these additional powers are necessary. Is there any proof that HMRC is unable to collect outstanding taxes within the framework of the existing legislation?
Adrian Ryan, Donegal, Ireland
This proposal is an outrageous extension to the powers of the taxman, who is already offensive enough.
It is the fiscal equivalent of removing habeus corpus combined with switching the burden of proof to the defendant (after having already strung him up).
It really is beyond belief that a so called liberal democracy should have come to this, but in some ways it is of a piece with the the goverment's approach to most things nowadays.
A very nasty piece of work altogether, and to be opposed vigorously.
cuffleyburgers, lucca,
I don't see the problem. if your taxes are not in order then they can be frozen. the individual then has to get on top of their situation. If the tax man keeps getting things wrong then i can see why this is not a good idea but to me it seems a way of saving a lot of time, particularly court time. paye gets taken without the individual being able to do anything about it.
honest worker, leeds,
There is already a procedure in place which allows HMRC to state its case whilst at the same time allowing the taxpayer to defend his. If HMRC never ever made a mistake then one could see the possible reasoning in asking for this power BUT HMRC very often get it wrong and already the taxpayer has to go through stressful, often expensive and certainly slow moving procedures to prove his innocence.
Why is it necessary for the HMRC to get more powers unless of course they are frustrated by their inability to prove their case and by financial pressure can get the taxpayer to concede on the basis it's better to pay even though it's unjust than to fight and go broke.
Stefan Zucker, La Bastide de Besplas, France
Presumably the Government have taken this decision due to their exemplary record on financial matters as evidenced by their management of Tax Credits.
Simon Long, Moscow, Russia
What if HMRC seizes the money and is then found to have been in the wrong? Imagine all the problems this power could cause, eg bank fees because of direct debits, no access to cash in an emergency . . . It is an extremely worrying suggestion by HMRC. Maybe the courts are expensive and time-consuming, but you could say the same about the whole justice system. What next, scrap all judges and juries too?
CFG, WGC, UK
If it weren't just another example of a long line of the present government's abuse fo state power I would be utterly flabbergasted by this. Whatever happened to the separation of powers, check & balances & judicial control on executive power? Clearly our bureacrats & their masters are finding the rule of law inconvenient. These people must go.
Jim, Edinburgh,
How stupid is this? You are telling me that a government agency has the commonsense and integrity to act with a judicial responsibility. If the government can lie about Iraq's forty-five minute missile threat, why wouldn't they also lie about taking your money from your accounts and then you can fight them through the courst later. Or, is it their money anyway?
Mr PJP, Brisbane, Australia
When you've got over 41% GDP in the public sector, this is inevitable. How else can they keep it going? 'Cutting the coat according to the cloth' is not a public sector value and all of these 'key workers' (HMCAR, DEFRA employees etc.) have to be paid! This proposal is another click of the ratchet.
Ray, Dartmouth,
Yet another example of Customs mentality prevailing over the old Inland Revenue. This smacks of "you're all smugglers, we just haven't caught you yet, so prove to us you're not" Where is the "innocent until proven guilty" Its gone, HMRC say you are guilty and that is sufficient to access your Bank Account. What this will do is encourage those who can afford good tax advisors to dream up good schemes to shift assets away from HMRC's reach, and which won't be caught by the disclosure rules, while the poor old,largely tax ignorant normal person is pursued into bankruptcy.
Chippy, Bristol,
Come back Stalin, all is forgiven.
Russia 1950 = Britain 2007
David, Lincoln,
"The withdrawal would not show up on the taxpayerâs credit record."
Ah! Well, that's ok then. Thanks very much HMRC - you're very generous.
What I want to know is ... who has given you the right to act as police, judge and jury when deciding a level of debt that is, many times, an abstract precept whoser validity is hotly contested by the taxpayer 'being threatened'?
The taxman has elevated his power to the same level as a court. One might be forgiven for thinking is an outrageous assumption. Who else has the right to withdraw funds from a bank account?
Edwin Thornber, Bucharest, Romania
Personally, I prefer to do without rather than get in debt whenever possible. I have always paid my debts and never had any County Court Judgement or suchlike against me. I know that there are people with irresponsible attitudes to debt and personal responsibility who can be very difficult to deal with.
Having said all that, however, I think this proposal is a huge mistake; the Inland Revenue already has a lot of power to collect tax. In my eyes, this proposal fundamentally undermines the concept of private property. The only other situation I can think of when bank accounts are treated like this is (alleged) terrorist organisations having their funds frozen.
What happens next when the genuinely unlucky businessman finds the state seizing his bank account without any judicial oversight? Even the Russians had the decency to put the Gordievsky through a trial before claiming his assets.
No. No. No.
Taxpayer, Reading, UK
The Revenue deliberately exaggerate tax owed by the self-employeed, as their initial negotiating position. One-way lawyer communication, compounded by a hard-wired, ROM mind-set, they proceed to make everyoneâs life a misery. By using "balancing payments" they charge tax on a period when an emigrated former UK-taxpayer was not working or even resident in UK. This opened the door to massive fraud, as identity theft of the recently retired/emigrants meant refunds went into the wrong hands. Nigeria ring a bell? Because the Revenue was defrauded of well over 6.0 billion in the last three years, they put a stop on all refunds. So forced to pay what you clearly did not owe, and the refund blocked. Now would that be fraudulent conversion, demanding money with menaces, or simply old-fashioned corruption? But "loan shark accounting" for sure. And when they did refund, they over refunded. They stand accused of arrogant incompetence. Bottom line: The Revenue are the biggest crooks of all.
Andrew Milner, Yokohama, Kanagawa
Just another example of this administration's obsession with turning this Country into a Stalinist, Totalitarian, Dictatorial State.
Mike 'Spudgun' Hardy, Romney Marsh, UK