HM Revenue & Customs will be able to directly access taxpayers’ bank accounts in order to recover unpaid tax, under measures announced in this month’s Budget speech.
The move gives HMRC similar powers to their counterparts in the US and France, and will only be used to recover tax and tax credit debts in excess of £1,000.
In the Budget Red Book, the measure is described as follows:
“The government will modernise and strengthen HMRC’s debt collection powers to recover financial assets from the bank accounts of debtors who owe over £1,000 of tax or tax credit debts, have the financial means to pay, and have been contacted multiple times by HMRC to pay.”
HMRC’s debt recovery powers will allow money to be taken directly from debtors; however, debtors’ combined account balances will not be taken to less than £5,000 in total.
Meanwhile, further measures were announced regarding the rate of tax debt repayment made by high earners.
The Red Book says that these repayment rates will be raised for the highest earners in the tax credit system.
“Households with higher incomes and smaller tax credit awards will repay their debts earlier,” the Red Book states.