HMRC’s direct recovery of debt proposals were controversial from the outset. Some were concerned about the potential for error, some about the lack of safeguards and others about the fact that the consultation was on the mechanics of a scheme that had already been committed to in principle rather than on the way in which the policy objective could best be delivered. Yet the policy objective – to deal with those who can pay but who can’t be bothered to – was one that appeared throughout to have had universal support.
The most fundamental concern over safeguards was that HMRC could not be allowed to act unilaterally. Some form of independent oversight – ideally the involvement of a court – was needed for this power to be safe. Without that safeguard it was simply a power too far.
There were discussions between the professional bodies, ministers and HMRC. There was a petition. The Treasury Select Committee questioned the measure. There was an early day motion. The press shone an unusually bright spotlight.
On 21 November, the government tabled revised proposals. To address concerns that the wrong person could be targeted, we now have a guarantee of a face to face meeting. To protect the vulnerable, we have a triage process to identify them and specially trained staff to deal with these cases. The requirement for details of twelve months bank transactions – which many had seen as a back door information power – has been dropped. HMRC has stated explicitly that it is not trying to restore Crown preference. The legislation will not be in the pre-election ‘wash up’ Finance Bill but in a second Bill after the election. The assurance commissioner’s annual report will describe how the power has been used and a report on the power will be presented to Parliament after two years. There will be a right of appeal to HMRC before money is taken from the account. Most importantly however there will be a right of appeal to a county court.
The involvement of a court is the thing without which this power would never have been acceptable.
The package addresses virtually all of the concerns that were expressed over the proposed new power. In terms of reacting to concerns, it has proved to be one of the most constructive consultations I can recall. And it is still not over. The response document makes it clear that comments will be expected both on these revised proposals and on the draft legislation. Even when implemented, it will initially be used on a much smaller scale than originally expected in order to build experience and to ensure that it works as intended.
We do of course need to see the draft legislation, particularly to see which safeguards are in statute and which are in guidance. In my view, all key safeguards must be statutory. We will need to see what the specified grounds of appeal to the county court are and whether they are wide enough. We will also need to look at whether there are enough safeguards to avoid unintended consequences from freezing of accounts before money is actually taken.
Overall though we are in a very different place from the one we appeared to be in earlier this year. And we have arrived there because of an open and constructive dialogue. Ministers and HMRC listened.
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HMRC’s direct recovery of debt proposals were controversial from the outset. Some were concerned about the potential for error, some about the lack of safeguards and others about the fact that the consultation was on the mechanics of a scheme that had already been committed to in principle rather than on the way in which the policy objective could best be delivered. Yet the policy objective – to deal with those who can pay but who can’t be bothered to – was one that appeared throughout to have had universal support.
The most fundamental concern over safeguards was that HMRC could not be allowed to act unilaterally. Some form of independent oversight – ideally the involvement of a court – was needed for this power to be safe. Without that safeguard it was simply a power too far.
There were discussions between the professional bodies, ministers and HMRC. There was a petition. The Treasury Select Committee questioned the measure. There was an early day motion. The press shone an unusually bright spotlight.
On 21 November, the government tabled revised proposals. To address concerns that the wrong person could be targeted, we now have a guarantee of a face to face meeting. To protect the vulnerable, we have a triage process to identify them and specially trained staff to deal with these cases. The requirement for details of twelve months bank transactions – which many had seen as a back door information power – has been dropped. HMRC has stated explicitly that it is not trying to restore Crown preference. The legislation will not be in the pre-election ‘wash up’ Finance Bill but in a second Bill after the election. The assurance commissioner’s annual report will describe how the power has been used and a report on the power will be presented to Parliament after two years. There will be a right of appeal to HMRC before money is taken from the account. Most importantly however there will be a right of appeal to a county court.
The involvement of a court is the thing without which this power would never have been acceptable.
The package addresses virtually all of the concerns that were expressed over the proposed new power. In terms of reacting to concerns, it has proved to be one of the most constructive consultations I can recall. And it is still not over. The response document makes it clear that comments will be expected both on these revised proposals and on the draft legislation. Even when implemented, it will initially be used on a much smaller scale than originally expected in order to build experience and to ensure that it works as intended.
We do of course need to see the draft legislation, particularly to see which safeguards are in statute and which are in guidance. In my view, all key safeguards must be statutory. We will need to see what the specified grounds of appeal to the county court are and whether they are wide enough. We will also need to look at whether there are enough safeguards to avoid unintended consequences from freezing of accounts before money is actually taken.
Overall though we are in a very different place from the one we appeared to be in earlier this year. And we have arrived there because of an open and constructive dialogue. Ministers and HMRC listened.
