HMRC’s controversial Direct Recovery of Debt powers, which allow the taxman to syphon money from the bank accounts of those it believes owe tax, have been expanded to allow the recovery of more money from high earners.
Previously the amount of money which could be recovered from those accused of evading tax was capped at £3,000 per year – however a sliding scale is being introduced this week, as reported by the Financial Times, which tops out at £17,000 in possible reductions for those earning over £90,000 per year.
The introduction of Direct Recovery of Debt was met with widespread criticism in both Government and financial circles. MPs argued the powers were in circumvention of the Magna Carta, and Ronnie Ludwig, a Chartered Accountant at Saffrey Champness, said:
“I am uneasy with the underlying principle. There is a marked lack of external oversight in the proposals. HMRC is effectively judge and jury, however diligently they go about it.”
HMRC is hoping their beefed-up powers will result in an extra £115 million collected in the 2015/16 tax year. A spokesperson said:
“Taxpayers welcome the option to have tax debt collected by instalment. This is a very longstanding feature of the payroll system but the increase in the current threshold will allow more tax debts to be paid in this way.”
Despite upping the amount they can recover directly from suspected tax evaders, HMRC has yet to answer the criticisms levelled at it when the powers were first introduced – namely, who will have oversight of the new powers, and what will happen if the powers are applied incorrectly?
Wondering if HMRC can take money from your bank account? Read more about Direct Recovery of Debt here