BUDGET PLAN WOULD EXPAND HMRC BANK ACCOUNT WITHDRAWAL POWERS

John Healey plans to use the Budget to expand HM Revenue and Customs’ powers to recover unpaid tax directly from current and savings accounts. The proposed change would let HMRC take money from people who fail to “engage” over what they owe. It would cover debts of a few pounds and would not require a court order. Taxpayers would have to challenge withdrawals after HMRC had taken the money.

HMRC already has direct recovery powers, but they currently apply only to debts above £1,000. The existing rules also require the account holder to retain at least £5,000 after a withdrawal. HMRC estimates that 4.8 million people and firms each owe less than £10,000, with a combined debt of about £4 billion. It puts the average debt in that group at £950.

Under the plan, HMRC could collect monthly instalments, fines and interest until a bill is cleared. HMRC is considering using income and spending data from credit reference agencies to assess what debtors can afford. It previously considered taking up to 50% of disposable income. A senior government source promised “rigorous” safeguards.