In the budget, Chancellor George Osborne has outlined plans to give more power to HMRC to recover tax debts from those who own more than £1,000.
Under the new rules HMRC will:
- Target those who have long-term debts and have received at least four demands for payment
- Ensure that the debtor will be left with at least £5,000 after the unpaid tax is seized
- Freezing the amount owed for 14 days to allow time for the debtor to pay
The tax authority has said that the average amount owed by those targeted is £5,800. In half of these cases debtors had more than £20,000 in their accounts.
HMRC will be able to seize funds from bank accounts, building society accounts and ISAs.
Following the budget, ACCA accountancy body initially described the plans as “seriously draconian” but now call them “less fearsome than first thought”.
Chas Roy-Chowdhury, head of taxation at the ACCA said: “On paper, the safeguards look relatively robust, and the reality is it is unlikely that anyone will be left penniless. The fact that there will be plenty of opportunity for those owing taxes to respond to HMRC and appeal before any funds are taken.”
“There remain some concerns over how efficient HMRC can be in maintaining those safeguards, as well as whether this initiative is in fact a toothless one that will make no difference at all to collecting taxes owed. However, it is important now to have constructive engagement with HMRC to ensure the proposals are reasonable and proportionate.”
This plan is currently going through the consultation process and if approved by Parliament should take effect in 2015-2016.
If you’re struggling with tax debts, speak to The Debt Advisor to see what solutions are available to you.
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