HMRC Direct Recovery proposal... "we will TAKE what we want"
Discussion
Just had this email from my accountant. Since it says to feel free to share the email, I will do so...
HMRC DIRECT RECOVERY POWERS
You may have heard that there are proposals out from Government / HMRC to grant HMRC a so called “direct recovery” power.
In essence this would allow HMRC to debit a tax payers bank account for any unpaid tax arrears, without oversight or prior notice. There would be a stipulation that the bank balance must remain at a minimum £5,000 after the debit so as not to dip into peoples business working capital or immediate household funds, but that’s more or less the only safeguard.
These proposals cover business and personal tax debts.
Many people are very worried about these proposals. HMRC already have powers to achieve the same end via the Courts, Direct Recovery cuts out that element of oversight and due process. It could be argued its "efficiency" for HMRC, or from an opposite perspective laziness.
The accounting profession has major concerns over HMRCs administrative capability – simply there are too many erroneous assessments, mistakes and misallocations – and the bottom line is many feel this is a step to far with HMRCs powers.
There is a longer article about some of the problems on Taxations web site:
http://www.taxation.co.uk/taxation/Articles/2014/0... (you should be able to read this without a login)
and a petition on the Government e-petitions web site: http://epetitions.direct.gov.uk/petitions/68384
Can I urge people to consider their response to this issue and
(a) Sign the petition
(b) Highlight the issue to colleagues, family and friends (feel free to share this email)
(c) Consider a letter of objection to your MP.
HMRC DIRECT RECOVERY POWERS
You may have heard that there are proposals out from Government / HMRC to grant HMRC a so called “direct recovery” power.
In essence this would allow HMRC to debit a tax payers bank account for any unpaid tax arrears, without oversight or prior notice. There would be a stipulation that the bank balance must remain at a minimum £5,000 after the debit so as not to dip into peoples business working capital or immediate household funds, but that’s more or less the only safeguard.
These proposals cover business and personal tax debts.
Many people are very worried about these proposals. HMRC already have powers to achieve the same end via the Courts, Direct Recovery cuts out that element of oversight and due process. It could be argued its "efficiency" for HMRC, or from an opposite perspective laziness.
The accounting profession has major concerns over HMRCs administrative capability – simply there are too many erroneous assessments, mistakes and misallocations – and the bottom line is many feel this is a step to far with HMRCs powers.
There is a longer article about some of the problems on Taxations web site:
http://www.taxation.co.uk/taxation/Articles/2014/0... (you should be able to read this without a login)
and a petition on the Government e-petitions web site: http://epetitions.direct.gov.uk/petitions/68384
Can I urge people to consider their response to this issue and
(a) Sign the petition
(b) Highlight the issue to colleagues, family and friends (feel free to share this email)
(c) Consider a letter of objection to your MP.
I doubt that this will happen - not without some serious reigning in. There are so many legal timebombs lying in wait if HMRC try this on. Don't forget, HMRC are not ranking creditors anymore so they are not entitled to tax money ahead of employees or banks etc.
If a tax man dips into a business bank account and makes a business miss its staff wages payments or its bank loan payments as a result, watch HMRC try to defend themselves on that.
If a tax man dips into a business bank account and makes a business miss its staff wages payments or its bank loan payments as a result, watch HMRC try to defend themselves on that.
Eric Mc said:
If a tax man dips into a business bank account and makes a business miss its staff wages payments or its bank loan payments as a result, watch HMRC try to defend themselves on that.
So long as there are double checks done before debiting, and the debt is e.g. three months overdue then what is the problem? If your business can not pay its liabilities then it is not really viable and perhaps time to sell up/have a serious rethink about carrying on. Cowboys have been allowed to phoenix for ages anyway and presumably can still pheonix to the detriment of their properly run competition and suppliers. At least with this law they would still have another serious liability that doesn't go away so easily (no doubt people will find a way round it anyway).The problem is the law.
HMRC has no special right to the money they are owed over those entities that have legal priority.
In 2003, Gordon Brown removed the priority that HMRC used to have to collect tax. In order for this new approach to be legal, the law needs to be changed. None of the proposals stated so far have mentioned any restoration of HMRC to the status of a ranked creditor.
Why should HMRC have a greater priority to the tax they THINK they are owed over a normal creditor such as a supplier? Don't forget, they don't always know for sure if any tax is actually owed.
If a tax amount is in dispute (which is not unusual), why should HMRC be able to collect any old amount they fancy?
HMRC has no special right to the money they are owed over those entities that have legal priority.
In 2003, Gordon Brown removed the priority that HMRC used to have to collect tax. In order for this new approach to be legal, the law needs to be changed. None of the proposals stated so far have mentioned any restoration of HMRC to the status of a ranked creditor.
Why should HMRC have a greater priority to the tax they THINK they are owed over a normal creditor such as a supplier? Don't forget, they don't always know for sure if any tax is actually owed.
If a tax amount is in dispute (which is not unusual), why should HMRC be able to collect any old amount they fancy?
Eric Mc said:
Why should HMRC have a greater priority to the tax they THINK they are owed over a normal creditor such as a supplier? Don't forget, they don't always know for sure if any tax is actually owed.
If a tax amount is in dispute (which is not unusual), why should HMRC be able to collect any old amount they fancy?
Exactly. That's what is so insidious about this proposal. If a tax amount is in dispute (which is not unusual), why should HMRC be able to collect any old amount they fancy?
Here's the consultation document that's a little less sensationalist: https://www.google.co.uk/url?sa=t&rct=j&q=...
Eric Mc said:
The problem is the law.
HMRC has no special right to the money they are owed over those entities that have legal priority.
In 2003, Gordon Brown removed the priority that HMRC used to have to collect tax. In order for this new approach to be legal, the law needs to be changed. None of the proposals stated so far have mentioned any restoration of HMRC to the status of a ranked creditor.
Why should HMRC have a greater priority to the tax they THINK they are owed over a normal creditor such as a supplier? Don't forget, they don't always know for sure if any tax is actually owed.
If a tax amount is in dispute (which is not unusual), why should HMRC be able to collect any old amount they fancy?
But surely the priority only legally applies should the Ltd or individual be declared bankrupt? Until then, anyone can grab what they can. The issue here is that another creditor would first need to obtain a court judgement and then seek enforcement of that, whereas HMRC now apparently have the power to bypass all that. HMRC has no special right to the money they are owed over those entities that have legal priority.
In 2003, Gordon Brown removed the priority that HMRC used to have to collect tax. In order for this new approach to be legal, the law needs to be changed. None of the proposals stated so far have mentioned any restoration of HMRC to the status of a ranked creditor.
Why should HMRC have a greater priority to the tax they THINK they are owed over a normal creditor such as a supplier? Don't forget, they don't always know for sure if any tax is actually owed.
If a tax amount is in dispute (which is not unusual), why should HMRC be able to collect any old amount they fancy?
Animal Farm springs to mind ....
HMRC will always put their case across as reasonable. It will not seem reasonable when they help themselves to money that they cannot confirm is owed to them - especially if it means others who ARE priority creditors are queue jumped.
The problem is there is no need for this particular legislation. If HMRC are owed a specific amount of money - which is a definite and agreed amount - there is plenty of law they can call upon right now to enforce collection.
The notion that a third party can order a bank to pay money it thinks it is owed to them OVERIDING other higher ranked creditors is draconian, unnecessary and grossly unfair.
The problem is there is no need for this particular legislation. If HMRC are owed a specific amount of money - which is a definite and agreed amount - there is plenty of law they can call upon right now to enforce collection.
The notion that a third party can order a bank to pay money it thinks it is owed to them OVERIDING other higher ranked creditors is draconian, unnecessary and grossly unfair.
Fotic said:
Eric Mc said:
The notion that a third party can order a bank to pay money it thinks it is owed to them OVERIDING other higher ranked creditors is draconian, unnecessary and grossly unfair.
Explain how a third party debt order is fair in terms of rank of debt. The law has always recognised that certain classes of debtors are protected to some extent.
The main ranked creditors are those set out in statute (such as employees) or those who have a charge or a guarantee from the debtors (such as banks).
I don't see anything particularly unfair about that.
HMRC USED to be one of these ranked creditors but the law was changed to put them in the same category as a normal creditor.
This proposed change puts them ahead of the ranked creditors and gives them rights and powers GREATER than they used to have.
Edited by Eric Mc on Friday 22 August 09:42
Eric Mc said:
Fotic said:
Eric Mc said:
The notion that a third party can order a bank to pay money it thinks it is owed to them OVERIDING other higher ranked creditors is draconian, unnecessary and grossly unfair.
Explain how a third party debt order is fair in terms of rank of debt. The law has always recognised that certain classes of debtors are protected to some extent.
The main ranked creditors are those set out in statute (such as employees) or those who have a charge or a guarantee from the debtors (such as banks).
I don't see anything particularly unfair about that.
HMRC USED to be one of these ranked creditors but the law was changed to put them in the same category as a normal creditor.
This proposed change puts them ahead of the ranked creditors and gives them rights and powers GREATER than they used to have.
Edited by Eric Mc on Friday 22 August 09:42
I do understand that this gives HMRC greater powers and I'm against that, to some extent. However the thought of this being used in some cases makes me quite happy. I just hope caution is exercised and that it's only really used in extreme cases, which I think it will be.
The option's there for ANY creditor to get a TPDO.
In many cases - perhaps even the majority of cases - it is likely that the amounts HMRC sequester for themselves may not be finalised amounts or may be subject to appeal.
What HMRC are actually saying is -
"stuff the courts
stuff legal procedures
stuff the ranking creditors
What we want, we will take and you can argue the toss later"
I don't expect the UK to be run in this manner.
What HMRC are actually saying is -
"stuff the courts
stuff legal procedures
stuff the ranking creditors
What we want, we will take and you can argue the toss later"
I don't expect the UK to be run in this manner.
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