Back in the spring, it was announced in the Budget that HMRC debt recovery procedures would change, with plans to recover underpaid taxes and overpaid tax credits directly from debtors’ bank and building society accounts. Pretty radical stuff. Since then, HMRC debt recovery plans have been widely criticised over their ‘draconian’ measures which appear to allow the raiding of bank accounts even though HMRC might have miscalculated the debt.
For example, we have seen several cases where HMRC enforcement agents have arrived at clients’ premises without correct information, trying to enforce payments which had already been paid, albeit misallocated.
We expressed our concerns to Sajid Javid MP, (then Financial Secretary to the Treasury, now Culture Secretary) about the proposed measures, specifically the way in which HMRC debt recovery will make use of new powers and a few weeks later, Mr Javid had received a letter from his colleague, David Gauke at the Treasury.
Mr Gauke was at pains to point out that HMRC debt recovery measures would only apply to those with established debts who had not responded to HMRC’s repeated attempts to contact them.
However, one client reported not receiving the relevant notices issued by HMRC, suggesting there are basic administration errors already affecting the system.
Only those with debts greater than £1,000 will be ‘raided’ and HMRC plans to leave a minimum of £5,000 in the debtor’s bank account.
There are also plans to refer debts to a Debt Collection Agency (DCA) where the DCA pursues the outstanding debt by making contact via phone, letter and SMS text. There is no ‘raiding’ by a DCA, nor is there any enforcement activity or face to face contact.
Mr Gauke was at pains to point out that the ‘’debtor’ would be given ample opportunity to dispute the debt. He feels harder-edged enforcement action is needed to collect overdue taxes from the minority whilst acknowledging the majority pay their taxes on time.
We still have concerns though as evidenced by some of our clients’ experiences.
Please let us know if you’ve been affected by the HMRC debt recovery processes as we would be keen to continue our discussions with the Treasury on the matter. Julia Whelan, Curo’s head of tax would be happy to discuss your concerns with you and take them forward on your behalf.
Curo Chartered Accountants