The Law Society has joined the chorus of opposition to government plans to allow HM Revenue & Customs direct access to tax defaulters’ bank accounts.
In its response to HMRC’s call for evidence on new powers for direct recovery of debts, the Society said the move was a ‘disproportionate’ measure that will lead to ‘unnecessary hardship’.
The solicitors’ representative body also suggested the proposals may be considered unlawful under the Data Protection Act.
HMRC says the measure will help it recover up to £100m a year from thousands of people who can afford to pay their tax bills but choose not to.
The plans have already drawn fierce criticism from the City of London Law Society, which called for the Treasury to put an immediate halt to them.
In its submission, the Law Society says new powers are not necessary as there are already streamlined procedures for tax recovery in the county and high courts. If HMRC feels its resources are insufficient to operate these procedures, the Society suggested subcontracting more work to lawyers.
To take on the policy, the Society added, would place the state in a ‘preferential position’ over other creditors, while also constituting an interference with privacy.
‘To adopt the measure would be a regressive step in a progressive society where the executive can take assets without judicial supervision,’ the response said. ‘That other territories have adopted a draconian measure does not lead us to consider that the UK should follow suit.’
The Society warned that many taxpayers will fail to obtain the legal advice necessary to appeal HMRC decisions. This is in part because the suggested notice period of 14 days is ‘too short’ for taxpayers to take stock and advice.
The Society added: ‘The consultation seeks views on the safeguards which are being considered and the operational aspects of the measure. The consultation should be on whether such a measure is even necessary or advisable as opposed to merely focusing on safeguards and operational issues.’
HMRC’s consultation closed on Tuesday and a response is expected in the autumn.
David Gauke, exchequer secretary to the Treasury, has said the proposals will ‘modernise and strengthen’ HMRC’s ability to recover tax and tax credits.
The power will be exercised only against taxpayers owing more than £1,000 and a minimum of £5,000 will be left in accounts after the debt has been recovered, the Treasury said.