Weekly Tax Update - August 10, 2015

1 General news

1.1 HMRC Issue Briefing - direct recovery of debts

HMRC has published an issue briefing setting out how the direct recovery of debt (DRD) provisions, are to be implemented. DRD will enable HMRC to recover tax debts from bank accounts of certain taxpayers and imposes obligations not only on HMRC and taxpayers but also banks and other deposit takers, who will need to comply with stringent time limits. The issue briefing highlights the safeguards that HMRC plans to introduce.

There have been calls to include all the safeguards in legislation (currently in Finance Bill Sch 4 and a draft statutory instrument) to ensure they are robustly followed. The non- statutory safeguards highlighted include:

a face-to-face visit from 'HMRC agents', ie not necessarily HMRC officers, before the debts are considered for DRD to: personally identify the taxpayer and confirm it is their debt; explain to debtors what they owe, why they are being pursued for payment, and discuss payment of the debt; discuss options to resolve the debt, potentially including offering 'Time to Pay'; identify debtors in a vulnerable position and offer them support from a specialist team to help them settle their debts; DRD will only proceed after such a visit; strengthening governance procedures, including oversight by HMRC commissioners; publishing statistics on the number of times this power is used and appeals raised; reviewing DRD fully after two years and laying the report before parliament. HMRC estimates that it will use the powers in a very small minority of cases (around 11,000 times a year). Its research indicates that taxpayers typically affected by DRD owe, on average, more than £7,000 and that almost half of those debtors have more than £20,000 in their accounts. The provisions are expected to come into force from Royal Assent.

www.gov.uk/government/publications/issue-briefing-direct-recovery-of-debts--2/issue-briefing-direct-recovery-of-debts

1.2 HMRC guidance on accelerated payment notices updated

HMRC has updated its guidance on accelerated payment notices (APN), which was first issued in 2014 when the APN legislation was introduced.

APNs are issued to taxpayers, requiring them to make a payment on account of potential tax liabilities in respect of certain tax schemes, such as ones under enquiry or appeal and covered by DOTAS. The update sets out:

what HMRC considers the taxpayer should consider on receipt of an APN; making representations; and that the amount payable on an APN may differ from the eventual liability...