HM Revenue & Customs has proposed an extension of its powers to allow unpaid tax to be seized directly from individual savings accounts, including stocks and shares Isas.
In a consultation document published this week, the tax authority laid out plans to recover debts from the bank accounts of taxpayers who owe more than £1,000, without the need to apply to a court.
The proposals, which HMRC estimates would affect 17,000 taxpayers each year, would enable the authority to access joint accounts as well as Isas, which are a major store of personal savings.
The power to gain access to stocks and shares Isas could have significant implications, said Simon Wilks, tax partner at PwC. Realising money from these accounts would necessarily involve the liquidation of investments at a particular value. “There is nothing in the consultation outlining how HMRC would [reimburse] money recovered in this way.”
The authority’s plan to draw on joint accounts – where half of any credit balance would be claimable, despite the fact that couples often do not contribute equally – contradicts the precedent of independent taxation, said Mr Wilks.
“The Revenue can’t know the consequences of what they are doing,” said George Bull, senior tax partner at Baker Tilly. He warned that premium account holders would risk incurring charges or losing services should their balance go below a certain threshold.
HMRC proposes that at least £5,000 is left in total across all of a debtor’s accounts, including savings accounts, after any seizure of debts.
On Thursday, the Treasury select committee expressed widespread concerns over extending these powers to HMRC, given the authority’s record of administrative errors. Without independent oversight, the body of MPs said that the proposal would be “wholly unacceptable”.
“We can’t assume that the Revenue will always act in a way that a tax tribunal would deem reasonable,” said Mr Bull.
HMRC is consulting on the proposals until July 29, during which it says it will work with stakeholders to determine how different types of cash holdings and savings products will be treated.