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Business Tax  •  HMRC  •  Personal tax  •  Taxation

Government dilutes HMRC’s proposed direct tax debt recovery powers

By Anne Eager on 9 December, 2014

In a previous blog published in August, we highlighted new proposals by HMRC to give them increased powers to collect outstanding taxes directly from taxpayers’ bank accounts. The so-called DRD (direct recovery of debts) capabilities would have entitled HMRC to collect what they believed to be outstanding tax debts, in advance of a settlement being agreed with a taxpayer.

However, after a successful campaign by the tax profession, including a petition of over 4,500 names organised by Taxation magazine editor Mike Truman, the government has intervened. The net result of this action is that HMRC’s original proposals have been diluted. For full details, read our earlier blog.

Now, it has been agreed that new safeguards will be introduced to protect taxpayers. These are as follows:

  • Debtors facing DRD action will be personally visited by an officer from HMRC to establish the case history and to provide personalised support to taxpayers who appear vulnerable;
  • A dedicated DRD helpline will be set up and specially trained DRD officers will work on live cases to ensure taxpayers do not feel overly threatened;
  • Debtors’ accounts will be placed on hold, with a 30 day period imposed during which outstanding taxes should be paid or a payment plan agreed with HMRC – this timeframe is twice as long as originally proposed;
  • The DRD powers will be introduced in a phased manner with additional safeguards imposed to ensure transparency and good governance;
  • To maintain an individual’s right to privacy, banks will no longer be required to provide 12 months historical data on a debtor’s account history.

Originally, the DRD legislation was expected before the May 2015 election. However it has now been confirmed it will be delayed until the Finance Bill 2015, expected to receive Royal Assent in autumn of next year.

HMRC have confirmed they expect DRD will affect around 17,000 individuals each year and that the average debt outstanding will be in the region of £5,800.

If you are concerned that you may have outstanding taxes, it is possible to make a voluntary disclosure to HMRC and be eligible for reduced penalties. To find out more about the process and potential implications, please contact Anne Eager by emailing ae@rjp.co.uk.

 

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