HMRC seeks to recover tax debt from ISA's

[CliveH]

HM Revenue & Customs (HMRC) is looking to increase its powers to allow it to take tax debts directly from individuals’ ISAs.

 

In this year’s Budget, the government gave HMRC the power to recover tax debts of over £1,000 directly from individuals’ bank accounts if they had ‘sufficient funds’ leftover.

 

In a consultation paper entitled ‘Direct Recovery of Debts’, HMRC proposed to extend these powers to take tax from ISAs in a ‘lower cost and less invasive’ way.

 

‘It is an administrative measure which will allow HMRC to recover tax and tax credit debts directly from debtors’ bank and building society accounts, including ISAs, without the need to apply to a court,’ it said.

 

HMRC proposed to leave a minimum of £5,000 after the debt has been recovered so it would not cause ‘unnecessary financial trouble’ for those individuals.

 

The types of debt that will be covered by HMRC’s new powers including unpaid tax including corporation tax and Pay As You Earn tax.

 

It added that debtors will be contacted several times and have many opportunities to pay before getting to the stage where HMRC will directly cover the debt.

 

It said it would only use these powers in cases where debtors have refused to co-operate or failed to answer letters, telephone calls or other communications.

 

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Model Adviser News - HMRC seeks powers to recover tax debts from ISAs

 

 

by Jun Merrett on May 07, 2014 at 10:02

 

[Guest peter]

Good idea and about time too.

[Brock]

This puts the HMRC above the law which is not a good idea. It makes it the judge of what is right and wrong.

 

Anyone who is defrauding the tax authorities on a sizeable scale will continue to hide their assets and not leave them to the claws of HMRC. The man on the street will again be the easy target.

 

Fraudsters should pay in time and money. If you want people to pay their taxes, then the pain of paying must be outweighed by the pain of not doing. This new 'grab and run' approach by the HMRC is just a pin prick, the last word being an accurate description of George when he comes up with these silly ideas. He ought to stick to the better thought through ideas he has.

 

I prefer formal legal action to recover what is due and to consider either a penalty of working in the community or a gaol sentence. Making some of the cases high profile will help. Investing in the staff at HMRC so they are better able to tackle fraud will also help.

 

Ever since Tony Blair started tinkering with the law to move us further away from Common Law, we have seen a steady stream of Government initiatives that erode our right to a fair trial. Be interesting to see what happens when the HMRC are taken to the European Court of Human Rights.

 

 

[CliveH]

The TSC comes up with a bit of sense in that it states the obvious that whilst people should pay tax - HMRC consistently and regularly gets it wrong!

 

In over 30 years in financial services I can honestly say that the tax man very rarely knows the rules on tax.

 

One classic I am dealing with right now is Deficiency Relief

 

What is deficiency relief?

 

"A deficiency is a negative return (a loss) on an investment bond at final surrender or on a death claim. Deficiency relief can reduce a policyholder’s liability to higher rate income tax in the same tax year as the one in which the deficiency is realised, but only if there were previous chargeable event gains on the same bond. It’s available to individuals only".

 

Basically - this is where if you take gains and pay tax on certain investments over a number of years, and then on death or surrender of the policy, there is a loss, Deficiency relief allows for a "total reckoning" of the tax on the gains taken and the loss on death or surrender. It was rarely used because most investments made a gain even after all the income withdrawals. But with the dire financial situation we have lived through over the last 5 to 6 years, we have had more than a few where overall at the time of death/surrender a loss occurred and so this Deficiency relief can be claimed.

 

I actually have on record - an HMRC official saying that he had never heard of this and because he had never heard of it, the individual could not have the tax relief we knew he was eligible for.

 

We sent the HMRC individual chapter and verse on this 25 months ago and STILL the client gets an annual "request" from HMRC for this tax to be paid. Despite our protests it seems obvious that the HMRC muppet has filled the papers because he has not got a clue.

 

What bothers me greatly about giving HMRC the powers to go into peoples bank accounts is that where you have ignorance of the law within the HMRC - you are also handing those truly ignorant people the power of being judge, jury and executioner.

 

If, the government wants to see a huge outflow of peoples money into offshore accounts and offshore investments, then this latest stupidity is a good way to go about it.

 

The laws already exist to claim back unpaid tax and to reclaim interest owed as well as substantial fines.

 

The last thing we need is for the dysfunctional HMRC to be given such powers.

 

http://www.hmrc.gov.uk/manuals/iptm/iptm3860.htm

 

 

 

 

[Guest Peter James]

Her Majesty's tax collectors have more power than the police. This dates from the time when their powers were granted by the king. He wasn't so bothered about the police, they were only their to protect the plebs, he had the armed forces with unlimited powers to protect himself.

The King obviously thought the job of the tax collectors more important the police, because they provided his income he gave them the greatest powers.

[nowtelse2do]

These are the bu**ers and their like that they should go after first. Amazon UK sales last year £4bn, tax paid £4m. And our own government are partly responsible for that.

 

Tax 10% of sale at sorce I say..

 

Have a look in the good old Daily Mail for full story, there's more to the story.

 

Dave