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Plans to allow HM Revenue and Customs (HMRC) to raid banks accounts in order to collect tax debts have been revised by the Treasury. The proposed plans have now been altered to allow taxpayers more time to appeal before money is taken out of their accounts.

What do the new plans propose?

Under the new plans, HMRC will still have the power to take hold of assets from individuals who owe more than £1,000 in tax or tax credits, but they will have to abide by certain safeguards.

The revised plans now mean that HMRC will have to conduct face-to-face meetings with those in debt before taking any money out of their accounts. In such meetings, different options to resolve the debt will be discussed and where appropriate, a Time to Pay arrangement may be offered. For vulnerable individuals, additional support will also be offered at such meetings.

The appeal process under these plans will be extended by the Treasury from 14 days to 30 days. If individuals are still unhappy after this time, they will be given a further 30 days to appeal to the County Court for independent judicial review. Something that has remained the same from the original plans is the reassurance that a minimum of £5,000 will be kept in the accounts of those who owe money.

How to avoid falling behind

If you know that you are falling behind in paying your tax or that the circumstances surrounding your tax credits have changed, take action as soon as you become aware of this. As can be seen from the new plans proposed, the more aware HMRC are of your situation, the more help they can give you.

Should you be unable to pay your tax bill, HMRC could take ‘enforcement action’ to get back the money that it is owed. This can include collecting what you owe through your earnings or getting debt collection agencies to collect the money. To avoid such action from HMRC, contact them as soon as you are aware of a problem. They will often offer you more time to pay back the money or the option of paying it back in instalments. Be aware that when you don’t pay your tax on time, you will often pay interest on the outstanding amount.

If you’re receiving tax credits and your circumstances change, contact the tax credit office as soon as you can – don’t wait until the annual tax credit renewal. Changes to your marital status, your working life or the number of children that you have all need to be declared. If you fail to declare these changes or miss the deadline for renewal, you may be at risk of being paid wrongly. If you are overpaid, the tax office will ask you to pay back the money regardless of whether you’ve spent it or not.

However, if you don’t want to claim tax credits anymore, still make sure that you check your renewal. This is because the renewal pack checks whether you were paid correctly for the past year. Failure to notify the tax credit office if you were paid the wrong amount could leave you having to pay out or being owed money.

For more information on tax credit renewal, click here.

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