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Wednesday, 2 April 2014

UK Bank Accounts Can Be Raided After Budget

HM Revenue & Customs will be able to directly access taxpayers’ bank accounts in order to recover unpaid tax, under measures announced in this month’s Budget speech.

The little noticed move gives HMRC similar powers to raid bank accounts and recover tax and tax credit debts in excess of £1,000.

In the Budget Red Book, the measure is described as follows:

“The government will modernise and strengthen HMRC’s debt collection powers to recover financial assets from the bank accounts of debtors who owe over £1,000 of tax or tax credit debts, have the financial means to pay, and have been contacted multiple times by HMRC to pay.”

At the moment, if HMRC want to seize your property or cash, they have to take you to court, win and then get a court order. Now, after a couple of warning letters and a phone call, they can do it in conjunction with your bank, with a touch of a button.

Crucially, there’s no safeguard built into this system. There should be a transparent and fair process and an appeals process.

Now, if HMRC officials decide you owe them cash, they can just take it directly from your bank account. If you haven't managed to reach agreement with them, then you'll just wake up one morning, check your bank account, and find your cash is gone. No insolvency proceedings, asset freezes, debt collection agencies or court proceedings. Just the government taking out whatever it believes it is owed.

This significant HMRC legislative change was buried deep in the Budget document and comes amid preparations by international monetary and financial authorities and the Bank of England for bail-ins.

The UK government can now confiscate UK citizens money directly from bank accounts while it decides if you have broken the law or not. This is a significant power grab and this and the real risk of bail-ins are another reason to own physical gold outside the banking system, in jurisdictions that respect private property.