The Treasury Committee said that it is of 'considerable concern' and warned that it could 'develop into a return to Crown preference by stealth'. The Committee considered that 'a lengthy and full consultation to be essential.
The Government went to consultation on the proposal earlier this week, as reported in Shout99 (See: HMRC debt proposals contain insufficient safeguards, Shout99, May 2014). The Treasury Committee has now said that his will need 'further and extensive examination', and that it will take further evidence on this.
The Committee felt that giving HMRC this power without some form of prior independent oversight, for example by a new ombudsman or tribunal, or through the courts, would be 'wholly unacceptable'.
Chairman, Andrew Tyrie (Con) said: “The proposal to grant the power to HMRC to take money directly from people’s bank accounts is very concerning. People should pay the right amount of tax. But HMRC does not always ask for the right amount.
"Some taxpayers may find money taken from their accounts that later should be paid back. That would be unacceptable.
"Exceptional powers such as this require prior independent oversight. The Government must demonstrate that it has dealt with the Committee’s concerns before proceeding. The Committee intends to take evidence from HMRC on this, among other issues, shortly.”
The proposal was initially outlined in the Budget and the Chancellor has argued that this measure can be justified because the Department for Work and Pensions (DWP) already has the right to take money directly from people’s bank accounts to pay child maintenance. Nevertheless, it met with considerable concern as it was generally felt that there were insufficient safeguards.
Now the Treasury Committee has said that the parallel with DWP is not exact, as in those cases, DWP is acting as an intermediary between two individuals, whereas HMRC would be acting in pursuit of its own objective of bringing in revenue for the Exchequer.
The Committee felt that this policy is highly dependent on HMRC’s ability accurately to determine which taxpayers owe money and what amounts they owe, which they said was an ability which had not always been demonstrated in the past. It recognised that the Government must consider safeguards, in addition to those set out in the consultation document, to ensure that HMRC cannot act erroneously with impunity. The Committee suggested that these might include the award of damages in addition to compensation, and disciplinary action in cases of abuse of the power.
The ability directly to have access to millions of taxpayers’ bank accounts also raised concerns about the risk of fraud and error, and it was felt that this should also be covered by the consultation.
Following the merger of HM Customs and Excise and the Inland Revenue in April 2005, an extensive review of HMRC’s powers, deterrents and safeguards was carried out from 2005 to 2012. The Committee believes that sufficient time has now passed to warrant a post-implementation review of these powers. The aim of this review should be to ensure that all the powers HMRC has at its disposal remain relevant and are no more than are sufficient to enable HMRC to achieve its objectives.
The Treasury Committee is comprised of MPs from all parties and examines and comments on the expenditure, administration and policy of HM Treasury, HM Revenue and Customs, and associated public bodies, including the Bank of England and the Financial Conduct Authority.
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Susie Hughes © Shout99 2014