"HMRC uses 'Big Brother' powers to seize pensions and dock wages"

[dutchman]

Investigation reveals how tax office recovered £54m via computer codes as tax debts soared in crisis



The taxman is using special powers to recover unpaid bills directly from wage packets and pensions after the pandemic made it impossible to deal with rising numbers of tax debtors in person.

Last year the Government handed the taxman enhanced powers to “collect more debts more quickly” using the “low-cost recovery tool”, which HMRC uses against taxpayers who fail to pay what they owe.

The tax office forcibly changed the tax codes of 134,000 debtors and docked money from their wages to recover more than £54m in unpaid bills last year, up from fewer than 74,000 the year before.

HMRC targeted more than three times as many people in this way in 2020 as in the previous year and collected more than four times as much money. It has seized more than £200m from the wages and pensions of more than half a million people since 2016.

It can dock between £3,000 and £17,000 from annual earnings using its coding out system at any time in the year. A limit of £3,000 applies to those who earn up to £30,000 and it increases by £2,000 for every £10,000 extra earned. The maximum £17,000 coding out limit applies to anyone who earns £90,000 or more.

Richard Morley of HW Fisher, a tax firm, likened HMRC’s resources and knowledge of citizens’ finances to the dystopian “Big Brother” state depicted in George Orwell’s novel 1984.

“HMRC has an astonishingly powerful computer system at its disposal. The system’s power and reach have increased over time in a Big Brother style, which inevitably makes it far easier for it to pursue things like the digital recovery of tax debts,” he said.

Tax debts have spiralled during the crisis to more than £65bn – more than three times higher than pre-pandemic levels. The tax office said it had shifted its focus from “maximising debt collection” to helping those who were struggling. This marks a distinct departure from its approach in previous years.

Last year only 3,600 people had face-to-face conversations with HMRC staff as “field officers” resorted to the phone instead. The taxman said all these visits were to business premises and in line with health guidelines.