As more details of the chancellor’s budget last week come under scrutiny, one measure will leave most Umbrella Company Employees breathing a sigh of relief that their NICs and tax affairs are handled automatically on a PAYE basis by their Umbrella: HMRC is to be granted new powers to go directly into the bank accounts of individual taxpayers and retrieve the money it calculates is owed.
The government intends to introduce new legislation authorising HM Revenue and Customs to recover tax and tax credits of £1,000 and above directly from individual taxpayer’s bank accounts. Anticipating criticisms about potential abuses of such an invasive measure, the government insists that the new power will be ‘subject to rigorous safeguards’.
The new law is intended to be included in the Finance Bill 2015; however, before it enters the statute book, there will be a consultation process during which views will be sought on the drafts of the primary and secondary legislation as well as the implementation of the new power.
Commenting on the development, legal expert Jason Collins, who is a partner with the law firm Pinsent Masons, said: “HMRC will be given the power to take tax debts over £1,000 directly from personal bank accounts. No data has been supplied, but presumably those who fail to pay their debts are more likely to be on lower incomes. Will they also use this power to collect tax directly from the 33,000 who receive an accelerated payment demand?”
Accountancy body ACCA described the measure as “seriously draconian”, noting that HMRC has a record of making mistakes.