The Government's has approved proposals for the Direct Recovery of Debts from taxpayer's bank accounts however following consultation has created the following safeguards to the measures which will be included in the 2015 Finance Bill.

These include:

  • a guaranteed face-to-face visit for every debtor who is considered for debt
  • recovery through this measure
  • additional support for vulnerable customers
  • strengthened governance processes
  • a new appeal route for debtors to take their case to a County Court.

In its Summary of Responses to the Direct Recovery of Debts consultion, the Government thanks those provided helpful views, feedback and suggestions throughout this consultation to all respondents for their constructive contributions, including thoseprovided by professional and representative groups.

The Low Incomes Tax Reform Group (LITRG) says that it welcomes the Government's willingness to listen to the Group's objections but awaits the draft legislation in order to review the definition of the term 'vulnerable'.

LITRG President, Anthony Thomas, said:

"We welcome HMRC's willingness to listen to consultation and to engage with us and other professionals on the form this new power should take.

"Our primary concern is that the vulnerable taxpayer or tax credit claimant on a low income who gets in a muddle should not be caught up in a process designed to target those who have the funds to pay their tax on time but who resolutely refuse to do so. We were also greatly concerned that taking funds out of someone's bank account without authorisation by the courts ran counter to the rule of law.

"The County Court procedure contained in the revised proposals provides the necessary judicial oversight before any money is taken – although not before the account is first frozen. The undertaking not to apply DRD before a face-to-face meeting with the taxpayer, and not to apply it at all where the taxpayer is adjudged vulnerable, is undoubtedly a step in the right direction and should prove adequate protection for that group of individuals.

"But importantly, these improved safeguards must be adequately set out in primary legislation. It is no good writing them only into guidance, as guidance can always be changed without reference to Parliament. We understand draft legislation will be published in due course, and we shall examine it keenly to ensure that it does all that we expect it to do."

Association of Taxation Technicians (ATT) President, Natalie Miller, said:

“These revised proposals represent substantial changes and to a large extent address our concerns."

"Throughout the consultative process, we have sought to highlight the merit of engagement with professional and voluntary bodies and we are delighted to see that they will now be collaborating with HMRC to produce literature which will be sent to taxpayers advising them to get help from a tax adviser."


The Low Incomes Tax Reform Group (LITRG)

LITRG is an initiative of the Chartered Institute of Taxation to give a voice to the unrepresented. Since 1998 LITRG has been working to improve the policy and processes of the tax, tax credits and associated welfare systems for the benefit of those on low incomes.