Following the consultation on controversial plans to grant HMRC sweeping new powers to recover owed tax directly from individuals’ and businesses’ bank accounts, the government has bowed to pressure and added ‘strong safeguards’ to its proposals.

When the consultation on the Direct Recovery of Debts (DRD) powers was published in May, many professionals expressed alarm that there were insufficient safeguards in the proposals, notwithstanding the declaration that only debtors who had repeatedly ignored the taxman’s efforts to make contact would be targeted.

The government has taken heed of these responses and has strengthened the safeguards significantly. Debtors will now be guaranteed a face-to-face meeting with a Revenue officer, allowing them to challenge or settle their tax affairs before DRD measures are implemented. Settling can include setting up an agreed payment plan rather than settling in full in a single payment.

Debtors assessed as ‘vulnerable’ will now be offered appropriate support and will be managed by a new specialist unit; significantly, judicial oversight will now be incorporated into the legislation to enable appeals to the county court.

The time period for debtors to contact the Revenue will be more than doubled ‒ from 14 days to 30 days ‒ before any money is settled or taken via DRD.

The Chartered Institute of Taxation (CIOT) and the Low Incomes Tax Reform Group (LITRG) have both welcomed the new measures, although both insist that the safeguards must be included in the primary legislation and not relegated to mere guidelines.

Contracting Umbrella Company Employees have little to fret about, as their tax and NICs are paid automatically on a PAYE basis.

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