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HMRC has confirmed that it will launch Withdraw money directly from bank accounts In the government’s latest bid to crack down on unpaid tax.
The tax authority says it is starting to use ‘direct recovery of debts’ powers, which require banks and building societies to Pay directly from accounts when requested.
This will only affect a “minority”, it claims, and is used only for businesses and individuals who are “able to pay their dues but are choosing not to do so.” The order can be given to banks, building societies etc. ISA Provider.
Official figures show the tax gap is currently estimated at 5.3 per cent, equivalent to £46.8 billion in 2023/24. Labor promised to raise £7.5 billion by tackling the gap in this year’s spring statement, with new measures including increased prosecutions for fraud and additional HMRC compliance staff.
The relaunch of direct recovery powers is another measure designed to fill this gap HMRC Confirming that it is initially powering up using a ‘test and learn’ approach.
Tax The authority has been able to use the powers since 2015, but the recovery has been put on hold during the Covid pandemic. Between 2015 and 2018, it made only 19 direct recoveries, returning £361,678.
HMRC says the powers will only be used if certain criteria are met and “stringent safeguards” are in place. To be subject to direct recovery, the debtor must owe £1,000 or more, have ignored HMRC communications, and could have paid but refuses to do so.
The tax authority also says it will not take funds from accounts where the balance after recovery is less than £5,000.
before taking any WealthAn HMRC agent must visit the person’s home or workplace. During this meeting they will investigate loan That’s right, discuss alternative ways they can pay the taxes they owe, and make sure the person isn’t vulnerable.
However, the Low Income Tax Reform Group said the tax authority should move ahead with setting up safeguards, writing: “We are seeking clarification from HMRC on the process they will undertake to identify vulnerable customers, how this class of taxpayer will be defined, and what type of support will be provided.”
If a debtor objects to the recovery, he can appeal within 30 days. HMRC say they will not transfer the money until a decision has been made, usually 30 days after the complaint. Debtors can also appeal to the county court on specified grounds.
An HMRC briefing said: “Some people experience genuine financial difficulty paying their tax. This is often when their life is affected by a major personal event, or a problem arises in their business. HMRC regularly takes a sympathetic approach to people who need extra help.”
The new powers come into effect ahead of the Government’s Public Authorities Bill coming into force later this year, which will give the Department for Work and Pensions (DWP) the power to recover money from bank accounts using recovery orders.
Campaigners have opposed these plans, debate earlier this week They threaten to introduce “unprecedented” levels of state surveillance.