Direct Recovery of Debt (DRD) – Statement from Chas Roy-Chowdhury, head of taxation at ACCA (the Association of Chartered Certified Accountants:
Improvements to DRD: "It’s a good day for tax payer confidentiality" – DRD proposals much better second time around
While ACCA would have preferred the power were not being proposed at all, we consider where we are today is light years better than what was originally being proposed.
There will now be a totally different ethos behind the way the power will be designed and implemented. It will no longer be played out as a remote controlled video game where HMRC remotely takes money out of the taxpayers account. There will now need to be face to face engagement between HMRC and the tax payer before anything can happen. Vulnerable tax payers will be identified and taken out of the process entirely and put in touch with a dedicated helpline.
We are pleased that the appeal process has been extended from the original 14 days proposed to 30 days, in addition to which a further 30 days will be allowed for the tax payer to go to the County Court for independent judicial review, where the funds in the account will not be touched by HMRC.
Only once a tax payer has been fully vetted by face to face contact and then gone through a much longer and detailed appeals process will anything happen on the DRD front. This is should mean only those who really are determined to escape their obligations to pay tax shall have this proposed power used against them.
In addition we consider it’s a good day for tax payer confidentiality as the new powers will be restricted to only asking the bank or building society for the balance in the account rather than 12 months information.
From a preferential creditor’s point of we were concerned that HMRC will jump the queue with this power. So we are pleased to also know that they will ensure this does not happen and they in fact repay to the liquidators any money ceased prior to the business going in to liquidation.
ACCA will make every endeavour to ensure the Government does not subsequently seek to strengthen these powers post implementation. Our initial feedback was forthright in criticisms of the original proposals, and it is because of our stance that arrangements have changed. Basically we have won every concern on safeguards we were looking for on the Direct Recovery of Debt. So it will still be in legislation, but a lot of its teeth will have been knocked out.