Treasury presses ahead with powers to take money out of your bank account
New powers allowing the government to take disputed funds from people's bank accounts are being watered-down following an outcry – but remain in place.
The plans, which featured in the small print of the Budget and were first reported by Politics.co.uk, allow HMRC to directly access money in people's bank accounts if it suspects they are using tax evasion measures.
The government is looking to hand HMRC control of the funds while it disputes the tax avoidance scheme in expectation of a future legal victory.
But its proposals caused dismay among civil liberties advocates and led to warnings that vulnerable people could be left without their savings following a mistaken HMRC decision on their tax affairs.
Today's autumn statement maintains the existing system but provides a host of additional safeguards.
Anyone subject to the new power, which will come into effect from 2015/16 and requires legislation, will receive a guaranteed face-to-face visit from an HMRC agent to identify any vulnerable people hit by the scheme.
The scheme will also be introduced more slowly in its first year so HMRC can "start the process on a smaller, more targeted basis".
And Scottish debtors will be protected entirely after the Treasury realised it has already got powers to recover debts in a "similar but not identical" manner.
The planned changes are likely to attract further criticism as they do not rule out the possibility that vulnerable people will have money removed from their accounts.
MPs on the Commons' Treasury committee have already warned no-one should have money mistakenly removed from their account which should then be taken back.
"Retrospection runs counter to the committee's principles of tax policy," committee chair Andrew Tyrie said in May.
"In particular, it undermines certainty. Retrospection should be considered only in wholly exceptional circumstances.
"Retrospection puts policy on a slippery path to arbitrary taxation, discouraging investment and innovation and creating the scope for great unfairness."
Judicial oversight will be introduced with an appeal to the county court inserted into the legislation, as opposed to a new ombudsman or tribunal as MPs had recommended.
Campaigners have warned direct recovery of debt is unfair because it empowers the government to pre-judge the courts' decisions.
The 2014 Budget book stated: "This brings the UK in line with many other tax authorities which already have the power to recover debts directly from an individual’s account, such as France and the US."