HMRC Will Siphon Thousands of Pounds Out of British Bank Accounts
HMRC Will Siphon Thousands of Pounds Out of British Bank AccountsReuters

New draconian laws will give the UK taxman the power to raid the bank accounts of ordinary Britons without a court order.

A parliamentary committee warned that granting the HMRC such power is "very concerning" due to the taxman's history of mistakes.

"The ability directly to have access to millions of taxpayers' bank accounts raises concerns about the risk of fraud and error," said politicians in a report.

"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. Incorrectly collecting money will result in serious detriment to taxpayers."

The taxman has already admitted to charging more than five million people wrongly through the Pay as You Earn system due to them being allocated the wrong tax code.

In 2007, the HMRC also lost physical discs that contained personal data and bank details of 25 million families claiming child benefit.

The Purpose of the Law

The HMRC revealed in a consultation document this week that the process of "direct recovery" will allow it take money straight out of joint accounts after the holder has failed to act on four formal warnings requiring payment.

Under current laws, the taxman can only remove cash from your account if a magistrate or judge gives it permission.

The new law was outlined in the UK Chancellor's Budget 2014 announcement.

"We will give HMRC modern powers to collect debts from bank accounts of people who can afford to pay but have repeatedly refused to, like most other Western countries," said George Osborne at the time.

Responding to concerns over the tabled proposals, 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."

Who it Affects

The HMRC revealed this week that under the new law it would immediately target 17,000 accounts.

People who owe tax authorities £1,000 or more could see that money seized directly from their bank accounts. However, this could only happen provided there was £5,000 left in their accounts afterwards.

The Treasury said the new law would only be applied to those who have repeatedly failed to pay their taxes. However, an influential panel of politicians has voiced concerns.

"People should pay the right amount of tax. But HMRC does not always ask for the right amount," said Andrew Tyrie, Conservative MP and chairman of the Treasury Select Committee.

"Some taxpayers may find money taken from their accounts that later should be paid back. That would be unacceptable."