Government putting themselves above the law.
Tucked away on page 94 of the Budget Red Book is a plan to give HMRC a new ‘direct recovery’ power. HMRC will be able to seize money from business and individuals’ bank accounts and cash ISAs if they ‘appear’ to owe tax – without following established legal proceedings. This directly contravenes taxpayers’ right to dispute tax bills within the court system, as laid down in our Magna Carta.
In principle
This attack on one of our fundamental right as British citizens has galvanised The Federation of Small Businesses, Liberty (a Human Rights group) and The Law Society to make a joint appeal to the government to stop these plans being actioned.
Barrister Francis Hoare of Field Court Chambers produced a report on this issue for The Taxpayers’ Alliance. He eloquently summarises;
“The proposal itself is objectionable in principle. The greatest legacy of the Magna Carta is the principle that the executive is subject to the law as much as the people, and yet the direct recovery legislation places the Crown in a superior position to individuals and businesses in its rights to enforce debts. It denies access to the courts for the resolution of disputed tax liability before property is frozen, and delays a judicial remedy for an indeterminate period. Most dangerously of all, it treats individual property as the property of the state once the state has determined it so.”
This all seems to be in direct conflict with David Cameron’s speech at Runnymede last month. He was exalting the place of the Magna Carta in British life in order to justify proposals to get rid of our Human Rights Act and exit the European Convention on Human Rights. As reported in The Independent, he said;
“Magna Carta takes on further relevance today. For centuries, it has been quoted to help promote human rights and alleviate suffering all around the world…It falls to us in this generation to restore the reputation of those rights and their critical underpinning of our legal system.”
Perhaps that’s not as important as the £375 million that HMRC officially expect to collect just from implementing these new powers over the next four years.
HMRC In Practice
The new two-step process involves firstly receiving a ‘hold notice’ which freezes all but £5,000 in your account. You have 30 days in which to object but the tax office are under no obligation to reply to such objections within a specified time period. The second step is getting a ‘deduction notice’ that commands your bank to transfer your money to HMRC. All done without any kind of legal hearing to defend your case or rectify any mistakes.
How long would £5,000 last your family or your business? Frightening.
The potential crises situations are obvious; individuals left unable to pay basic bills, subsequently racking up more debt and businesses forced into insolvency. Part of the plan does state that, “Having widely consulted, this measure will be subject to robust safeguards including a county court appeal process and a face-to-face visit to every debtor before they are considered for debt recovery through this measure.” That’s all O.K. then!
Most taxpayers have very low confidence in HMRC’s capability to administer their current system successfully and additional powers will only add more pressure to an already stretched government department. As Jonathan Isaby, the Chief Executive of the Taxpayers’ Alliance said;
“HMRC made 5.5 million errors last year, and giving the organisation powers over and above that set out in the Magna Carta is hugely worrying. 800 years ago, the principle was set down that individuals would have recourse to the courts when challenged by the Crown or by what would become parliament. Removing that protection is profoundly dangerous and we urge the government to reconsider this legislation as quickly as possible.”
The old saying “If it ain’t broke, don’t fix it” does spring to mind here. In Britain, we are justifiably proud of our historical commitment to what is fair. Given that our rights as taxpayers to question our government’s application of the taxation law has served us well since 1215, it is heartening to know that some are still championing its importance now it has come under threat. This is one budget change that has the capacity to affect us all.
