HMRC 'Judge And Jury' On Taking Money From Your Account, Experts Warn

Taxman 'Judge And Jury' On Taking Money Direct From Your Account
George Osborne, U.K. chancellor of the exchequer, speaks at an interview during a Group-of-20 (G-20) Finance Ministers and Central Bank Governors meeting in Sydney, Australia, on Sunday, Feb. 23, 2014. Osborne said the nation is in 'active' discussions with China to establish a yuan clearing bank in London and this should be done in 'fairly short order.' Photographer: Ian Waldie/Bloomberg via Getty Images
George Osborne, U.K. chancellor of the exchequer, speaks at an interview during a Group-of-20 (G-20) Finance Ministers and Central Bank Governors meeting in Sydney, Australia, on Sunday, Feb. 23, 2014. Osborne said the nation is in 'active' discussions with China to establish a yuan clearing bank in London and this should be done in 'fairly short order.' Photographer: Ian Waldie/Bloomberg via Getty Images
Bloomberg via Getty Images

George Osborne's plan to let the taxman search thousands of Britons' bank accounts for unpaid taxes has drawn concern from experts for its lack of oversight.

An estimated 17,000 people will have their accounts raided each year by officials, HM Revenue & Customs said in a new consultation about how the scheme would work.

Osborne outlined the new powers for HMRC in his March Budget, which MPs branded a "mad idea that should have been strangled at birth".

The measure, which has been described as "unprecedented", would allow 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.

Lib Dem MP John Thurso said last month that the powers were a "massive change", adding: "The next thing is that other people will just say 'Oh we'll have a dive into your bank account'."

HMRC's new powers would allow it to take money from bank accounts, building society accounts, and individual savings accounts (Isas). The plans, which are going through consultation, could come into effect in 2015-2016 if voted through Parliament.

Ronnie Ludwig, private wealth partner at the accountancy firm Saffery 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 should not be able to raid people’s bank accounts without gaining the permission of the courts first. Recently HMRC has also gained the power to demand tax in dispute upfront, before appeals or court hearings have taken place. We seem to be witnessing a creeping extension of executive government power. ”

“The consultation does not properly address a scenario under which a person or company goes bankrupt. If HMRC can recover money without going to court but others must, this could put the Revenue in position where it is effectively preferred creditor, a status which it lost in 2003.”

According to HMRC estimates, those targeted would have an average debt of around £5,800, with half of them having over £20,000 of tax debt in their accounts.

Treasury minister David Gauke said: "The government’s long term economic plan is to reduce the deficit so that we deal with our debts. It is therefore important that people pay the tax they owe, on time. Although the vast majority do this, there is still a minority that chooses not to pay, despite being able."

"Providing HMRC with the powers to directly recover tax debts will reduce the debt owed to HMRC in the most effective way so that the government can continue to fund vital public services."

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