HMRC to get access to your bank account?
It has been proposed that HMRC will have access to individual’s bank statements, in order to assess whether they are able to deduct tax owed to them directly from their bank.
HMRC will receive the last 12 months bank statements of the taxpayer. HMRC will then review the spending of the individual and assess whether it will cause any hardship on the individual if they were to collect the tax owed directly from the bank account of the debtor.
Understandably, this has been a very controversial proposal. From HMRC’s point of view, this could be an easy way of collecting any tax owed to them. In particular, HMRC have stated that there are approximately 17,000 taxpayers which deliberately do not pay the tax which they owe to HMRC. This is because they know that HMRC will struggle tracking them down and getting the money from them.
Of these 17,000 taxpayers, the average tax owed by the individuals was £5,800 with many of them owing less than £1,000. Whilst this can be a lot of money for some people, HMRC is aware of how much these taxpayers have in their personal bank accounts. Some of them are reported to have £20,000 of savings, with a few of them having as much as £100,000 in their savings pot.
It therefore is understandable that HMRC want to have access to these bank accounts to enable them to receive their money without any more fuss. If the money is there, then the tax owed should be paid.
On the other hand, from an individual’s point of view, in particular for the majority of taxpayers who pay their tax on time, it can be quite worrying that HMRC have access to their personal bank statements and that they could have access to take money directly.
Also, with HMRC having these powers it could lead to errors, including deducting incorrect amounts or deducting money from the wrong person or bank account. This could also lead to fraud with HMRC staff having access to millions of bank accounts.
May 6, 2014