Scary new powers for scary taxman to deduct what he likes from your salary (without telling you)
HMRC seems to be getting more sinister by the day. Hot on the heels of regulations allowing HMRC to forcibly remove cash in unpaid tax debts from your bank account, new regulations out for consultation would allow HMRC to change an employee’s tax code, which governs how much tax is deducted from salaries before reaching their bank account, without telling them- for up to 30 days. This means employees could receive far less (or presumably more) wages than they were expecting with no prior warning. Which seems a bit off.
Currently both employer and employee are immediately informed when a tax code is changed, and this allows the employee to contact HMRC should the tax code be incorrectly amended. Figures released last month showed that the number of taxpayers who had paid an incorrect amount of tax rose to 5.5m last year, so it’s not like the system is foolproof either. The proposed delay would mean people only find out when it is too late to correct the mistake and the money has already been deducted from their monthly salary.
Lesley Fidler (her real name, honest), a tax director at Baker Tilly, said: "When you are counting the pounds in your pay packet…you are thinking 'have I got enough this month?'…People will effectively be lending to the taxman out of their salaries."
However, Lin Homer, chief executive of HMRC, insisted that the powers would only be used in extreme circumstances and would never leave taxpayers short of “enough money to live.” But before you start chuffing about how on Earth the stonkingly well-paid Chief Exec of a public body would be able to gauge what is enough to live on, don’t worry, because HMRC propose to be able to judge this perfectly by gaining access to 12 months of the target’s personal spending habits. That’s not terrifying AT ALL.
An HMRC spokesman said that the delay is only likely to be used in "limited circumstances" at busy times of the year, such as around the self-assessment deadline and that it was all OK as “HMRC anticipates savings for the taxpayer of several millions pounds in printing and postage costs, as a result of these changes."
HMRC will, however, welcome “comments on the detail” of the regulations, before finalising them “in the autumn."
The proposals are currently out for consultation until the end of July.