Do HMRC statistics really justify new tax collection powers?

The UK taxpayers are a pretty stoical breed but, if there is one thing that gets their collective hackles up, it is being harassed by HMRC for outstanding tax debts that don’t actually exist. People expect to be chased up for sums which are legitimately owed but really don’t like it when there is no foundation for the debt and, until they have much greater confidence in the accuracy of the Revenue’s alleged figures for outstanding tax debt, they are certainly not going to countenance any more talk about giving HMRC powers to dip into the bank accounts of people who allegedly owe them money. The question of just how accurate the Revenue’s figures actually are was raised in a recent article by Baker Tilly, one of the largest providers of tax services in the country.

If you ask any tax services professional what most people’s main beefs are when it comes to tax, they will most likely agree that everyone should pay their fair share and that HMRC shows an even-handed approach when dealing with individual taxpayers. Those experienced in tax services argue that confidence in the system is paramount and the cornerstone of the whole tax collection edifice.

It therefore came as a major shock to the tax services industry when HMRC’s latest mid-year report to Parliament revealed that the total sum of outstanding tax debt was actually expected to rise in 2015 compared with the figure for 2014. This was amazingly heralded by HMRC as a major success story and a direct result of the Revenue’s achievements in both compliance with and enforcement of the prevailing tax code.

As tax services experts are quick to point out, these reports to Parliament and the statistics they contain have quite a large influence on public policy and it is very worrying when HMRC effectively confesses that it has previously overlooked tax debt which it has somehow now managed to identify. What is of particular concern to the tax services sector is the threat of the Revenue being given powers to directly debit people’s bank accounts to recover sums, which it deems to be owed.

Those working in tax services and tax investigations are all too well aware that only last summer HMRC confirmed that it was seeking powers to dip into the bank accounts of taxpayers deemed to have amounts owing and hoped these might be introduced during the tax year 2015-2016. Many of those working in tax services question whether or not the Revenue contrived this picture of rising tax debts merely to reinforce its case.

Considering the number of times they have witnessed tax debts claimed by HMRC to be subsequently proved to be totally inaccurate, it is hardly surprising that so many experienced tax services professionals are so sceptical about the accuracy of the department’s total figures relating to tax debt and the wisdom of letting the Revenue have too much power when it comes to raiding taxpayer bank accounts.

If you have concerns about the accuracy of any tax deemed to be owed to HMRC or about any other specific tax matter, please do not hesitate to contact Baker Tilly’s tax services department.

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