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Warning! – Direct Recovery of Tax Debts

New Legislation is to be introduced shortly to allow HMRC to ‘dip into’ the personal Bank Accounts of any Taxpayer who owes them money.

These new powers are aimed at Taxpayers who ‘refuse’ to pay the Taxman the amounts of Tax he believes is due.

Now I suppose as parents, we are all used to having our pockets or Bank Accounts ‘dipped into’, by our offspring. I recall that about 20 years ago it was revealed that it probably cost parents around £30,000 to raise a child from birth to a fully independent adult. With the new ‘toys’ of I-pads, internet and mobiles replacing the ‘cheaper toys’ of my era of Subbuteo, Monopoly and Cluedo (to me, Professor Plum always seemed to end up as the guilty one using the candlestick in the study), this £30,000 figure is likely to be considerably higher, probably at least £45,000 per child. – I have a little tip for you parents. If you want to call a family meeting, then just turn off the Wi-Fi, they will all soon come running to you!

According to HMRC, they have estimated that out of 50million Taxpayers, the new Direct Recovery of Tax Debts powers will only be used in about 11,000 cases, so according to the Taxman this will only apply to a relatively small number of the Tax paying population.

However, in my opinion statistics can be manipulated to suit. In this case, clearly only a small percentage of the 50million Taxpayers will actually owe HMRC any Tax. This is because the majority of these will be employed and hopefully paying the correct amount of Tax under PAYE through their weekly/monthly payslips.

In the House of Commons debate on this, concern was expressed on the potential for HMRC to make mistakes or target innocent parties. David Gauke, the Financial Secretary to the Treasury, seemed to think this would be “unlikely”. Personally, I would like HMRC to put further measures in place to ensure this was virtually impossible, rather than just “unlikely”.

Anyone can make mistakes, (take me for example, six months ago I bought a vacuum cleaner for £149 from Argos, but so far all it’s been doing is gathering dust!). – Seriously, I would like HMRC to publish the percentage error rate of mistakes or third parties they have innocently targeted by using these new powers. My prediction is that this would make interesting reading, and should be made public in The House of Commons.

More alarmingly, these new powers can also be used on joint Bank Accounts. The assumption will be that these the funds held in a joint Bank Account will be owned jointly, regardless of the source of these funds, so in this respect at least one half of these funds can be used to pay the Tax debts HMRC believe to be due. The reality of many situations will be that the innocent party on this Bank Account may have contributed substantially more towards the funds in this Bank Account than the person who is owing the Tax debt.

In conclusion then, we can envisage HMRC becoming more and more aggressive in chasing up Tax debts. So, it is vital every Business are aware as soon as possible of any forthcoming Tax Bills whether this be personal Tax, Business Tax, PAYE or VAT. Good record-keeping, cash flow planning and budgeting are the key to this.

If anyone requires further advice or assistance on record-keeping, cash flow planning, or budgeting, then please contact me as I will be happy to assist.


Rickey Cooper FFA, FMAAT, ATT

JCL – Jones Cooper Limited


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