Taxman may soon be able to take money from your bank account if you have unpaid tax
The Government has announced some proposed changes to HMRC's powers when it comes to collecting unpaid tax which have been grabbing the headlines. In light of these changes I thought it would be useful to provide clarification of the proposed changes and HMRC's current powers.
What are the proposed changes to HMRC powers?
- the new HMRC powers would allow HMRC to take unpaid tax direct from an individual's bank account (and potentially joint accounts)
- money can only be taken once four requests for the tax have been ignored
- the amount owed in tax must be more than £1,000
- after payment of the tax owed a sum of £5,000 must still remain across all of the customer's bank accounts
What current actions can the HMRC take to collect unpaid tax?
Telephone
- after written communications have been ignored the majority of debt management is conducted by telephone
- talking to customers directly often results in immediate payment or an agreement to pay the outstanding tax over an agreed period
Clerical calls
These are calls made to a customer's home address or business premises
- may be conducted to confirm customer's address, place of business etc.
- payment request will be made but the HMRC representative has no legal powers to enforce payment
- collect missing returns
- obtain an overall view of the asset position of a customer
- provide warning of enforcement action
- offer advice or serve legal documents
Meetings
Occasionally there will be a need to have a formal meeting with a customer face to face to resolve outstanding tax issues
- help fill out tax returns
- establish the correct figure owed
- discuss a repayment plan
Enforcement action
This is a last resort to collect tax once all other avenues have been exhausted and will only be pursued if the customer -
- fails to keep to an agreement made to pay tax owed
- fails to respond to a request for payment
- fails to submit missing returns
Enforcement action will be one of the following -
- Legally take possession of goods and sell them at public auction
- Summary proceedings in the Magistrate Court
- County Court proceedings
The HMRC officer attending must -
- act withinin the law
- not force their way into your premises without a court order
- not remove goods considered 'tools of the trade'
- cannot remove household goods (e.g. washing machine) or goods owned jointly with another person
What should you do?
- ensure you pay your tax on time
- if you are unable to pay your tax by the due date then inform HMRC as soon as you are aware
- try and reach an agreement on a repayment plan
- inform the HMRC of any changes to your circumstances that could affect your ability to pay your tax due
- don't ignore the problem, it will not go away
