The UK's HM Revenue and Customs (HMRC) is facing criticism from MPs over its new powers to directly access and seize funds from bank accounts to recover unpaid taxes. This initiative, part of efforts to close the tax gap, allows HMRC to take money if the debt exceeds £1,000, leaving at least £5,000 in the account.
MPs and tax advisors express concern that this measure is overly intrusive and could lead to errors, requiring individuals to pursue lengthy legal battles to reclaim incorrectly seized funds. Sir Iain Duncan Smith described the policy as a 'tyranny of the state,' while Mark Garnier called it 'a step too far'.
Similar powers are also being considered for the Department for Work and Pensions to combat benefit fraud. Additionally, a consultation is underway on making it easier for HMRC to deduct taxes from workers' pay to recover underpaid tax on savings interest.
The plan, initially introduced in 2014 but paused during the COVID-19 pandemic, has triggered a backlash among MPs due to its potential impact on taxpayers and concerns over individual rights.