The Institute of Chartered Accountants of Scotland (ICAS) has called for a longer notice period and stronger safeguards in response to proposals that would expand HMRC’s power to recover smaller tax debts directly from taxpayers’ bank accounts.
While ICAS said that it backs the objective of collecting debts from individuals who are capable of paying but choose not to, it has expressed concerns over the proposed procedure.
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The professional body highlighted the potential impact on taxpayers requiring additional support.
The consultation notes that HMRC may not always know if an individual needs extra assistance, particularly where that person has not engaged with the department.
ICAS pointed out that many people who need extra support struggle to engage with HMRC.
Under the current proposals, the primary measure to address this is a ‘clear prompt’ within the Pre-Deduction Notice (PDN).
This instructs recipients that if they are in a “particularly difficult personal situation, or require extra support, they should contact HMRC immediately”.
ICAS said this prompt does not provide an “adequate safeguard”.
Instead, it recommended introducing mandatory face-to-face visits before instructions are sent to deposit takers.
It said an in-person visit would serve as a good protection for all individual debtors and should be compulsory at a minimum for any cases identified for manual review.
The institute cited HMRC’s 2019 review of its Direct Recovery of Debts powers, which showed that most cases were resolved before funds were taken directly from accounts.
Earlier stages in the process prompt payment in the majority of instances, ICAS noted.
It expects the proposed PDN to similarly encourage engagement and payment, making an extended notice period essential.
ICAS said the proposed 14-day window should be increased to at least 30 days.
In the absence of stronger protections, ICAS suggested a 60-day notice period would be appropriate to allow taxpayers, especially vulnerable individuals, sufficient time to seek assistance and contact HMRC.
