03/04/2014 08:44 BST | Updated 03/04/2014 08:59 BST

George Osborne Defends HMRC Power To Take Money Direct From Bank Accounts

Luke MacGregor/WPA-Rota
Chancellor of the Exchequer George Osborne uses a Lloyds Cashpoint machine to withdraw some money during a visit to a branch of Lloyds TSB on The Strand, in central London.

George Osborne has been forced to defend plans to let the taxman go into Britons' bank accounts for money believed to be owed in unpaid taxes after MPs branded it a "mad idea that should have been strangled at birth".

Lib Dem MP John Thurso made the attack when the chancellor appeared before the Treasury select committee, as he questioned why HMRC would get the "power to delve into people's bank accounts without judicial oversight".

Thurso rebuked the chancellor for choosing to "slip [the plan] through in two paragraphs" in last month's Budget Red Book "without any thought about the implications".

He added: "It is a massive change in the constitutional arrangement. 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".

Tory MP Andrew Tyrie, chair of the committee, warned that safeguards to stop officials overreaching the limits of their new power risked being "eroded".

Osborne's new measure for HMRC officials to be able to dive into bank accounts for money they think is owed has provoked widespread outcry, as critics warned it risked making officials a "law unto themselves".

In response to the committee's concerns, Osborne said that the Department for Work and Pensions already had the power in relation to child maintenance payments.

"The vast majority of people pay their taxes on time and the people who don't pay their taxes are a burden on everyone else, and the taxes have to be higher on everyone else as a result."

"Some people who have been contacted on average nine times by the Revenue, and have exhausted all their appeals," he pointed out, which would work as a "judicial safeguard".

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.

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."

Emma Carr, deputy director of Big Brother Watch, warned: "Today the taxman has to go to court to seize your money. Now he'll be able to do it with a click of a mouse. People won't object to HRMC having legal powers to pursue people who owe them money but they shouldn't be able to do it without any independent oversight.

"At a time when the government is looking to rein in the number of public officials who can enter your home without a warrant it is bizarre that the taxman is getting the power to raid your bank account. These powers could have a serious impact on people's lives and as a basic step of protecting peoples liberties they should not be exercised without a court's approval."

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