HMRC could raid your bank account for tax debt under new powers with deadline this week

HMRC could raid your bank account for tax debt under new powers with deadline this week Under current rules, the tax office can apply to take money directly out of the bank accounts of people who owe more than £1,000 - but it could be set to lower this threshold HMRC could soon be granted greater powers to take debt repayments directly from bank accounts. HMRC wants to introduce new ways for it to recoup smaller tax debts. Under current rules, the tax office can apply to take money directly out of the bank accounts of people who owe more than £1,000. The person must be left with at least £5,000 across their accounts once the debt has been settled. But new proposals would give HMRC powers to reclaim tax debt on smaller amounts owed through direct monthly payments. The measures could apply to debts of up to £5,000 for individuals and £10,000 for businesses, and would only be used as a last resort, if the individual has repeatedly ignored communications from HMRC. It is estimated that up to 4.8 million individuals and businesses owe around £4billion in low debts and could potentially fall within the scope of these new rules. However, HMRC suggests it expects less than 250,000 companies and individuals would be eligible per year. Ahead of the consultation closing this Friday, August 28, tax advisory firm BDO has called for more details to be published about the taxpayers who could potentially be affected. Dawn Register, a tax dispute resolution partner at BDO, said: "These proposals would give HMRC the ability to recover lower value tax debts by taking money directly from individuals' and businesses' bank accounts. For millions of taxpayers, that represents a significant new intervention by the tax authority and it is essential that the safeguards are robust. “While we support HMRC taking action against those who deliberately refuse to pay tax or engage with the tax authority, the proposals raise important questions around affordability, taxpayer rights and whether HMRC has sufficient resources to operate the system fairly." As part of its current safeguards, HMRC must make a face-to-face visits to assess for vulnerabilities, and discuss other payment options, before they can apply to recover tax debts from bank accounts. A formal 30-day notice must also be issued before any money is taken so people have time to appeal or set up a payment plan. An HMRC spokesperson said: “The portrayal of these figures is highly misleading. In 95% of debt cases, the support we provide means customers pay the tax they owe without the need for further action. "Only a small minority of taxpayers who can afford to pay but repeatedly refuse to do so could be affected by these new measures, which will ensure fairness for all taxpayers and be subject to robust safeguards.”