Financial News

  • 12 May 2014, 6:54

PM Defends Powers To Seize Unpaid Tax

Failing to collect unpaid tax would mean rates having to be hiked, David Cameron has told Sky News as he backed plans for cash to be seized directly from bank accounts.

The Prime Minister said non-payment of tax was "unacceptable", and insisted the move would have safeguards.

He was speaking after the Treasury Committee said it has "considerable concern" about the idea, which it warns could result in innocent people having cash taken from them.

HMRC estimates 17,000 people a year will be affected, and says money will only be taken after four demands for payment have been ignored.

The cross-party group wants further scrutiny of Chancellor George Osborne's debt collection proposals before they are implemented, describing a "lengthy and full consultation" as "essential".

Compensation and disciplinary action are suggested by the committee as extra safeguards.

In their report on this year's Budget, the MPs say the change could be akin to the reintroduction of the discredited Crown Preference Rule by stealth.

This gave HMRC priority access to assets when companies went out of business.

The chance of fraud and errors occurring is also highlighted, with the MPs warning this would be a "serious detriment" to taxpayers.

The report says: "This policy is highly dependent on HMRC's ability accurately to determine which taxpayers owe money and what amounts they owe, an ability not always demonstrated in the past."

But Mr Cameron told Sky's Political Editor Adam Boulton: "I think we have a choice here. If we don't collect taxes properly and make sure pople pay their taxes properly, we look at the problems of having to raise tax rates. I don't want to do that."

"So I support the changes the Chancellor set out in the Budget, which is to really say that not paying your taxes is not acceptable."

He argued the move would be governed by "rules and regulations", and added: "The general principle, do we want to pursue every avenue of making people pay their taxes that they are meant to pay before we put up taxes - because that's the alternative - absolutely yes we do."

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