A proposal to allow the taxman to raid taxpayers’ bank accounts without permission has been met with heavy criticism based on grave errors made by HMRC.
The new idea placed on the table by government would make it possible for the tax office to confiscate assets of those with unpaid tax without permission. David Cameron says the system could be a ‘vital new cog’ in the current tax system, helping to clamp down on tax avoiders and reduce the amount of unpaid tax each year.
However, experts have labelled the idea as “unconstitutional”; “against the magna carta”; a “smash and grab” approach to tax collection and “potentially illegal”.[quote]There is good reason many feel unease over a plan to allow the Revenue unfettered access to millions of bank accounts,”[/quote]
writes The Telegraph’s Dan Hyde in his latest personal finance column.[quote]To put it bluntly: how can we entrust such immense power to an organisation that so frequently makes errors?”[/quote]
Such thinking is not unfamiliar to the majority of taxpayers, many of whom are sure to have been on the end of the HMRC’s many miscalculations and mix-ups. One such case was that of 70 year old Rod Smith – a retired tax office worker who had served the HMRC for his entire career.
In 2008, Mr. Smith received a surprise tax bill for £3,917 covering the period 2004 to 2007. As it turned out, HMRC had issued the wrong code for deductions for this period and had not collected enough tax; however the error took four years to come to light and had been out of the hands of Mr. Smith, who was under the impression his taxes were in order.
After miscalculating the correct tax for one of their own staff and taking four years to realise it, HMRC then had the audacity to demand the payment from Mr. Smith almost immediately, within 30 days. After appealing the tax bill with the help of The Sunday Telegraph, Mr. Smith was refunded the £3,917 and paid an extra £150 in compensation.
However, he acknowledged that if he had handled things by himself, the result “would not have been as positive”.
Indeed, Mr. Smith is not alone. More than five million workers were charged the wrong amount of tax in 2013-14, and HMRC was forced to repay or write off £4 million in tax in the 12 months to April after thousands approached the Tax Adjudicator for help.
The adjudicator found that, in nine out of ten cases, the taxpayer was eligible for a concession on their tax deductions, suggesting that HMRC is making errors that could easily be avoided.
Judy Clements, head of the adjudicator’s office, said:[quote]Many complains should have been resolved without the customer needing to refer the matter to me.
I see far too many cases where a conversation with the customer early on would have enabled a straightforward resolution to the issue. [HMRC’s] communication with affected taxpayers is poor.”[/quote]