A British banking official has warned the Chancellor not to allow the tax authorities to raid bank accounts for any unpaid tax.
In a stinging attack on HM Revenue & Customs, Anthony Browne, the chief executive of the British Bankers’ Association (BBA), said that the tax authority was not competent enough to handle such powers.
In a letter to Chancellor George Osborne, he expressed ‘real concerns’ over plans that would allow HMRC the authority to take unpaid tax directly out of bank accounts, saying that it risked falling foul of human rights legislation.
The Chancellor suggested in April’s Budget that HMRC could be given the powers to recover unpaid tax from debtors’ accounts if they owe £1,000 and have failed to respond to communications. The tax authority would have to ensure that it left a minimum sum in the account.
But the plans have courted controversy and have bolstered significant opposition from politicians and accountants.
Mr Browne’s numerous objections included the size of the threshold, HMRC’s dubious track record, and the potential conflict of interests at work.
He said the £1,000 threshold was too low and could put vulnerable taxpayers at risk, as well as “undermining public faith in the tax system.”
Additionally, he questioned the ability of HMRC to handle such powers.
“It is clear HMRC’s performance cannot yet be considered as sufficiently competent to wield an unchecked power this strong, at least not without significant reputational damage and potential litigation,” he wrote.
“HMRC would effectively be a judge in its own cause,” he added.
The BBA also pointed to a report from the Tax Adjudicator’s Office, which showed that it upheld – partly or in full – 90% of the complaints it processed against HMRC during the 2013-14 tax year.
The Treasury defended the proposals, however, insisting that it would ensure “robust safeguards” were in place to protect vulnerable taxpayers.