ICAEW: HMRC could supersede insolvency law with new powers

by Rachael Singh

More from this author

09 Apr 2014

  • Comments
ICAEW at Moorgate Place

THE ICAEW has warned that HMRC is in danger of violating insolvency laws with its new bank raiding powers.

The March Budget saw HMRC given powers to take money from bank accounts of debtors who owe more than £1,000 in tax or tax credits. In the Budget papers it said that the change would bring the UK in line with many other tax authorities such as France and the US.

However, the ICAEW's tax faculty is warning that HMRC will effectively supersede insolvency law and make itself a preferential creditor under the new rules, as reported by Accountancy Age in March. This could lead to perverse effects such as people keeping money in cash rather than bank accounts and moving funds offshore, the institute warns.

"We believe it is imperative that there are proper safeguards and there should be proper judicial oversight of any decisions made with rights of appeal," said ICAEW Tax Faculty head Frank Haskew.

He told Accountancy Age that at the moment the details on how the bank raiding powers will take effect are not clear but a consultation before the Finance Bill in 2015, implementing the change, should take place later this year.

HMRC could find itself taking money from a debtor who then enters bankruptcy proceedings. In this scenario an insolvency practitioner appointed to the bankruptcy will have no choice but to pursue HMRC for funds legally belonging to all the creditors.

Haskew added that in this scenario the new rules would be "counter-productive" but that he hoped the consultation and actual rules would tackle this issue.

"Although it is possible [in this scenario] I'd be surprised if it wasn't looked at. I would have thought some of these problems would be flushed out," he said.  

Visitor comments

blog comments powered by Disqus
display:none

Add your comment

We won't publish your address


By submitting a comment you agree to abide by our Terms & Conditions

Your comment will be moderated before publication

Submit
  • Send

conservatoire-for-dance-and-drama

Finance-Director-part-time

Conservatoire for Dance and Drama, London, Permanent, Part Time, £60,000 pro rata

 

 

Newsletters

Get the latest financial news sent directly to your inbox

  • Best Practice
  • Business
  • Daily Newsletter
  • Essentials

Careers

Search for jobs
Click to search our database of all the latest accountancy roles

Create a profile
Click to set up your profile and let the best recruiters find you

Jobs by email
Sign up to receive regular updates with the latest roles suitable for you

Briefings

budget-management

Why budgeting fails: One management system is not enough

If budgeting is to have any value at all, it needs a radical overhaul. In today's dynamic marketplace, budgeting can no longer serve as a company's only management system; it must integrate with and support dedicated strategy management systems, process improvement systems, and the like. In this paper, Professor Peter Horvath and Dr Ralf Sauter present what's wrong with the current approach to budgeting and how to fix it.

cchcover

iXBRL: Taking stock. Looking forward

In this white paper CCH provide checklists to help accountants and finance professionals both in practice and in business examine these issues and make plans. Also includes a case study of a large commercial organisation working through the first year of mandatory iXBRL filing.