There has been a lot of debate around the powers of the HMRC; mainly whether the powers they have are fair and balanced.

An area in which it could be argued they have too much power is in the recent revelation provided by UHY Hacker Young.

HMRC are using a method of debt recovery called ‘attachment of earnings’; 428 people reported having cash taken straight from their pay packets in 2017-18. Although this ensures HMRC gets that which is owed, this method does not allow an individual to reduce their payments if they are particularly short of money one month.

UHY Hacker Young explained: “When HMRC has to physically seize control of goods and then sell them through auctions, the process can often drag out for long periods of time before debts are fully recovered. Goods at auctions also typically go for far less than their equivalent market value.”

Attachment of earnings is therefore a quicker, less confrontational way for HMRC to secure the money they are owed. Considering how resources are increasingly focused on the likes of Making Tax Digital and Brexit preparations, it is understandable that too much pressure on their resources could mean they are stretched too thin.

However, this method does not allow as much understanding for individual cases, should they wish to contest the amount taken. HMRC can limit their interactions with the debtor in these scenarios; a far more distant way of securing payments.

“An ‘attachment of earnings’ order is one of the most aggressive tools HMRC has at its disposal,” claimed Simon Browning, partner at UHY Hacker Young.

Nonetheless, the Court works out the minimum amount a debtor needs to live on before they decide how much HMRC can take from their earnings. This is known as the ‘protected earnings rate’. Although this does ensure that an individual is protected, it does leave the rest of their earned money at risk of being secured as payment.

“They allow HMRC to quickly seize an individual’s hard-earned cash before it even reaches their bank account,” Browning continued. “If individuals want to avoid losing control over their monthly pay checks, and how they spend their wages, they have to ensure they don’t fall behind on tax payments.”

UHY Hacker Young has emphasised that HMRC is becoming “increasingly impatient over chasing outstanding debts and continues to build up its recovery teams.”

In 2016, HMRC spent £24m on private sector debt collectors. In just twelve months, the amount spent had risen by 62% to £39m by the end of 2017.

Browning concluded: “Overall, HMRC’s use of attachment of earning orders could be seen as yet another example of [their] dash for cash against people who can’t pay their bills.”



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