It’s estimated that as many as 17,000 people a year could have their bank accounts accessed by HMRC in a bid to recover unpaid tax, under new rules that could take effect as early as 2015.
The new powers will allow HMRC to seize money owed in unpaid tax, and HMRC would be able to take the money from bank accounts, building society accounts, and Individual Savings Accounts (ISA’s).
Following the Chancellors original budget announcement, HMRC have now given further details of some of the criteria that’ll be incorporated into the recovery process. These include:
- HMRC targeting only those who have long-term debts and have received at least four demands for payment
- Ensuring that at least £5,000 is left in total across all debtor’s accounts, including savings accounts, after the unpaid tax is seized
- Freezing the amount owed in accounts for 14 days to allow time for a debtor to pay before the money is seized
Many view these safe-guards as a response to claims that the new powers – when originally announced – were “draconian”, and HMRC have gone further by pointing out that the average tax debt of those likely to be targeted is £5,800, and that in at least 50% of cases they anticipate that the debtors will have more than £20,000 in their accounts.
David Gauke, a treasury minister closely involved in the governments various responses to tax avoidance, comments:
“Providing HMRC with the powers to directly recover tax debts will reduce the debt owed to HMRC in the most effective way so that the government can continue to fund vital public services”.
Needless to say, this proposal should not cause any concern for freelancers working via a compliant umbrella solution such as that offered by Liberty Bishop. Under the umbrella model, all tax and NI contributions are deducted on a PAYE basis using the individuals’ personal tax code and the relevant income tax and national insurance rates put in place by the government…leaving no possibility of an unpaid tax liability on those earnings.
Liberty Bishop are a specialist payroll and accountancy provider for contract workers, providing fully compliant and user-friendly solutions on both a domestic and international basis. If you’re a contractor/freelancer, and would prefer that HMRC do not have reason to access your bank accounts, please feel free to contact us.