POLITICS

George Osborne's Power To Raid Your Bank Account Questioned By Senior MPs

14/04/2014 11:18 BST | Updated 14/04/2014 11:59 BST
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CARDIFF, WALES - MARCH 5: Chancellor of the Exchequer George Osborne, poses with a newly minted one pound coin during a visit to the Royal Mint on March 5, 2011 in Cardiff, United Kingdom. The Conservative Party is in Wales for it's annual spring forum. (Photo by Toby Melville - WPA Pool/GEtty Images)

George Osborne's new plan to let the taxman take money direct from people's bank accounts for unpaid taxes will be examined by MPs amid mounting fears of its impact on civil liberties.

Tory MP Andrew Tyrie, chair of the influential Treasury select committee, told the Financial Times that his colleagues would be take "further evidence on the extension of HM Revenue & Customers' powers" to establish whether the chancellor was going too far with his latest plan.

The "unprecedented" measure is billed as a move to crack down on tax dodgers by allowing the taxman to take unlimited amounts of money from individuals' bank accounts without their permission or a judge's approval if officials believe more than £1,000 in unpaid tax is owed.

Tyrie warned: “We must be vigilant to ensure we don’t lose the essential balance between the powers that HMRC needs and protecting individuals."

“Parliament needs to pay attention when these powers are extended,” he said. Tyrie also said that the proposal was of "considerable concern" to him and his colleagues.

Lib Dem committee member John Thurso said that the plan was a "mad idea" that should have been "strangled at birth", adding: "This is a huge change, the next thing is that other people will just say 'Oh we'll have a dive into your bank account".

Tax experts have hit out at the proposal, arguing that it is potentially illegal and excessive. Frank Haskew, head of the tax at the Institute of Chartered Accountants in England and Wales, told MPs that it is "a fundamental tenet of our English law and our democratic society" that money "cannot be grabbed from somebody’s account without a judge agreeing to the move".

He added: "At the end of the day, we can’t have HMRC as judge and jury on this."

Haskew said that the powers, which could come into force next year, are "extremely worrying and excessive", adding that they were "of considerable concern to many taxpayers and accountants" and that "there are no details yet of any judicial or other safeguards that could protect taxpayers".

He warned that the new law could have "perverse effects", encouraging people to keep their money in cash, rather than their bank account, in order to keep it out of HMRC's grasp.

Dr Eamonn Butler, director of the Adam Smith Institute, told HuffPostUK: "I am always very suspicious when officials take power to remove people's assets. There are already perfectly good laws obliging people to pay their bills, including their tax bills. And there are punishments if they don't – but those punishments only come after the sentence of a court.

"If we allow the authorities to take cash from our accounts for any amount they think we owe them, then none of us is safe. They become a law unto themselves. This is a very worrying threat to civil liberties. And just because it is done by other countries, that do not have our common-law safeguards, is no reason for us to do it."

Under the proposal, officials will only be able to use the power for Britons who have been asked "multiple times" by debt collection officials to pay, and must leave at least £5,000 in the account.

Once HMRC takes the money, the taxpayer will have 14 days to get in touch and set up a payment plan, otherwise officials will keep what they have taken. Osborne's Budget also gave HMRC the power to take money from those they suspect of unfairly avoiding tax, with money only handed back - with interest - if the taxpayer wins a legal challenge in the courts.

An HMRC spokesperson said: “There will be a full public consultation in the near future and appropriate safeguards will be legislated as part of the measure's implementation in 2015.

"This is about levelling the playing field between those who have the means to pay but refuse, and the majority who pay what they have to or otherwise engage with us. Those covered by the measure will have on average in excess of £20,000 available to them but still refuse to pay. Only a small number of people who will have already been prompted at least four times by HMRC are in the scope of the measure.”

George Osborne Looking Awkward With Voters