The Summer Budget has confirmed plans to give HMRC powerful new tools to recover unpaid tax –including direct recovery from personal accounts.
As part of a series of measures to widen and strengthen HMRC’s powers, the Treasury will legislate to enable the tax authority to recover tax and tax credit debts directly from debtors’ bank and building society accounts, including funds held in cash ISAs.
The Budget states that having consulted on these controversial new powers, the Treasury will ensure they are subject to robust safeguards including a county court appeal process, and a face-to-face visit to every debtor before they are considered for debt recovery through this measure.
In a separate move to “improve tax compliance among small businesses”, the government will also legislate to enable HMRC to acquire data from online business intermediaries and electronic payment providers, to help identify businesses that are trading but not declaring or paying tax.
HMRC will consult on these proposals, which will involve recruiting new investigators, this month.
HMRC is also due to get a funding increase of more than £60m by 2020-2021, to allow it to step up criminal investigations into serious and complex tax crime.
This scheme will focus on wealthy individuals and corporates, with the aim of raising £600m by the end of the parliament.
As part of the continued clamp down on tax avoidance, planning and evasion, the Budget also reveals the following measures to assist HMRC:
• Tripling the number of criminal investigations HMRC can undertake into complex tax crime;
• Stopping investment fund managers from using tax loopholes to avoid paying the correct amount of capital gains tax on their profits;
• Making sure international companies pay tax on profits diverted from the UK;
• Introducing a ‘general anti-abuse rule’ penalty and tough new measures for serial avoiders, including publishing the names of people who repeatedly use failed tax avoidance schemes.
By Marcel LeGouais