POLITICS
09/05/2014 05:56 BST | Updated 09/05/2014 08:59 BST

HMRC Power To Raid Your Bank Account 'Unacceptable', MPs Warn

LONDON, ENGLAND - JUNE 19: Britain's Chancellor of the Exchequer George Osborne withdraws money from a cash machine during a visit to a branch of LloydsTSB bank on June 19, 2013 in London, England. The Chancellor,  is expected to outline the government's plans for the future of banks Lloyds and Royal Bank of Scotland during a speech at the Lord Mayor's Bankers and Merchants Dinner at Mansion House later. (Luke MacGregor  - WPA Pool/Getty Images)
WPA Pool via Getty Images
LONDON, ENGLAND - JUNE 19: Britain's Chancellor of the Exchequer George Osborne withdraws money from a cash machine during a visit to a branch of LloydsTSB bank on June 19, 2013 in London, England. The Chancellor, is expected to outline the government's plans for the future of banks Lloyds and Royal Bank of Scotland during a speech at the Lord Mayor's Bankers and Merchants Dinner at Mansion House later. (Luke MacGregor - WPA Pool/Getty Images)

George Osborne's new powers allowing the taxman to raid Britons' bank accounts for money that officials believe is owed without a court order has been branded "wholly unacceptable" by an influential group of MPs,

The cross-party Commons Treasury committee said it had "considerable concern" over the chancellor's proposed debt collection powers for HM Revenue and Customs and called for further scrutiny. This comes as accountants warned that the plan leaves HMRC "judge and jury" on potential raids on bank accounts.

In the committee's report on this year's Budget, the MPs said: "The proposal to grant HMRC the power to recover money directly from taxpayers' bank accounts is of considerable concern to the committee. The committee considers a lengthy and full consultation to be essential.

"Giving HMRC this power without some form of prior independent oversight -for example by a new ombudsman or tribunal, or through the courts - would be wholly unacceptable."

Around 17,000 people will have their accounts raided each year by officials, HMRC said.

The committee dismissed the defence put forward by George Osborne, who pointed out that the Department for Work and Pensions' already had similar powers to collect child maintenance.

"The parallel is not exact: in those cases, DWP is acting as an intermediary between two individuals," the committee said.

"HMRC would be acting not as an intermediary between two individuals but rather in pursuit of its own objective of bringing in revenue for the Exchequer."

"This policy is highly dependent on HMRC's ability accurately to determine which taxpayers owe money and what amounts they owe, an ability not always demonstrated in the past. Incorrectly collecting money will result in serious detriment to taxpayers.

"The government must consider safeguards, in addition to those set out in the consultation document, to ensure that HMRC cannot act erroneously with impunity.

"These might include the award of damages in addition to compensation, and disciplinary action in cases of abuse of the power."

The measure, which has been described as "unprecedented", would allow the taxman to take unlimited amounts of money from individuals' bank accounts if officials believe more than £1,000 in unpaid tax is owed.

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.

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

Some experts have warned that the plan, which is billed as a measure to tackle tax dodgers, is potentially illegal.

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'."

UK Independence Party (Ukip) leader Nigel Farage told LBC 97.3 radio: "It's appalling. I believe in the principle of innocence before guilt. What the taxman now does is he sends you a demand and says 'You owe me this money, you're guilty. Prove to me your innocence'.

"Now we are going to give them the power not just to send us the demand and threaten us, but to take it straight out of our bank accounts. It mustn't be allowed to happen."

According to HMRC, 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: "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."

See also:

George Osborne Looking At Things