HMRC have published a consultation document about a new power which will allow HMRC to recover debts from the accounts of debtors who have chosen not to pay what they owe despite being able to, for comment by 29 July 2014 according to Harris & Co accountants Northampton, the small business accountants. Harris & Co accountants Northampton say that the new proposals could have a devastating effect on small businesses.
Direct Recovery of Debts (DRD), as announced at Budget 2014, will provide HMRC with the ability to recover cash directly from the bank accounts, building society accounts and ISA accounts of debtors who owe significant debts of over £1,000 and have sufficient funds in their accounts to pay. Such debts, which could be made up of just one tax debt or a few different tax debts, will include National Insurance contributions that are due to HMRC.
To ensure that this measure does not create unnecessary financial trouble for those affected, the Government propose that a minimum of £5,000 is left in the taxpayer’s account after the debt has been recovered.
Additional checks and procedures, such as the right for a debtor, once notified, to appeal before money is taken; and pro-rata safeguards for joint accounts, are also being proposed.
This consultation seeks views on the implementation of the safeguards and other operational aspects DRD from anyone who could be affected by these changes, including institutions that take deposits and groups representing vulnerable debtors.
The consultation document is available from GOV.UK.