The Forum of Private Business is urging the government to scrap plans to give new powers to HM Revenue & Customs to recover outstanding debts directly from small companies’ bank accounts.
The proposals – announced in the budget in March – will give HMRC inspectors the power to recover funds from the self-employed and small businesses, if they have sufficient money to pay the debt.
HMRC will be able to take money from people who owe officials more than £1,000 in tax, if they have been asked “multiple times” by debt collection officials to pay. Inspectors must leave at least £5,000 in the account.
“This brings the UK in line with many other tax authorities which already have the power to recover debts directly from an individual’s account, such as France and the US,” the budget stated.
A consultation on the proposals closed yesterday (July 29).
The FPB argued the new powers would unfairly target small firms and failed to take into account unexpected costs such as stock or new investment, which can be considerable and above the allowed £5,000 cash safety net outlined in the plans.
Alexander Jackman, FPB head of policy, said: “Many of our members already feel they are unfairly targeted by HMRC and these proposals do little to dispel this commonly held belief.
“The sheer variances of cash flow in different types of businesses and the limited resources available to effectively implement these proposals are also a real concern. These proposals, if introduced, could leave many of our members feeling that they are being unfairly targeted and government should seriously reconsider.”