HMRC can read your bank accounts without asking, budget 2021

(The short takeaway: manage your banking etc with this in mind, merely being aware is all you need to defend yourself against unexpected undesirable outcomes. Destiny is all, take charge of yours.)

We have always thought our home is our castle. At least we used to until we generally became aware of the large number of organisations that can acquire or simply have the right of forced entry to our homes.

So we comfort ourselves that our bank accounts both private and business are confidential and known only to us. Anyone wanting access has to ask and obtain our authorisation. This means we rarely make any effort to make sure our accounts read in a satisfactory fashion when viewed alone.

No longer.

Quote: A new Financial Institution Notice will be used to require financial institutions to provide information to HMRC when requested about a specific taxpayer, without the need for approval from the independent tribunal that considers tax matters.

To be clear, as far as I can see, they DO have to tell you, see 7a and 7b. Though it does not say when this has to be. If you were an officer, would you not leave it until too late for you to do anything? Not that there is anything you can do. This lack of appeal is a recent common approach in UK taxation, which I think places too much power in the hands of civil servants who have the occupational hazard of viewing all taxpayers as dodgy. Example:

Follower notices (FNs) and Advance Payment notices (APNs).

It doesn’t have to be very long a delay. It doesn’t say they have to tell you in advance. Bear in mind there is no appeal in any case except JR (Judicial Review) which is prohibitively expensive for you the individual acting alone.

At this point there is no requirement to involve a tribunal. So, this is like a knock at the door to inform you, not to ask for permission. It strikes me delivery in person by a tax official would be an effective tactic to try to acquire co-operation where it has been lacking. Of course, you can always grant your permission, but I do not see why they would ask as they are not required to do so, which is perhaps the whole point of all this as compared to the past.

To be fair the UK is apparently the only G20 country to require the consent of a tribunal before this power can be used in secret: paras 8,9,10. It seems clear that parliament intends this power only to be used in secret when they think the taxpayer is up to no good. However, it doesn’t actually say that, though they must present good reasons for secrecy, how good remains to be seen in so far as “tax at risk” is always going to be the view of the tax collector. As regards “good reasons” the “tribunal is satisfied that the officer has reasonable grounds” or it “might prejudice the assessment or collection of tax”.

The intention is to enable HMRC compliance with foreign and domestic tax investigations.

Typically, it takes HMRC a year to get the secret approval whereas the G20 target is six months.

That said, they are also intended to assist in tax debt collection. Remember a while back HMRC was given the power to remove money from your account without your permission? However, they need your bank details for that. If I recall correctly they cannot take funds where the balance is or falls below £5,000 . Need to validate this.

To repeat: there is no appeal. That leaves Judicial Review which is very costly and out of reach of most folk. My issue with all this is that there is no guarantee the officer is playing fair with the taxpayer, who may be as innocent as the day is long. “Tax man” pressure creates massive stress in a person’s life. Usually. You might reply overnight to an HMRC enquiry, but they will take a month or much more to then respond. What might take you a week to settle runs to six months or a year or worse. Each night being a sleepless night for you, which becomes debilitating and affects judgement. As “they” say “justice delayed is justice denied”.

HMRC is required to report to parliament each year their use of this power, so in time we will see the extent of the use of it. Then we may determine the degree of risk we need to attach to it as regards unexpected matters to deal with and the impact on mental health. Saying “I have nothing to hide” will make no difference. I say this in the context of someone viewing your bank account with a view to harming your finances by placing their own counter interpretations on your affairs. Of course, they will say it will be seen in context. Whose context is that then?

Here is the “explanatory note” published 21 July 2020, and I gather enacted in the recent 2021 Budget.

Like all legislation the text is long and involved so search “HMRC’s civil information powers” to see comment from many others. However, to my pleasant surprise the actual draft legislation itself looks quite clear and succinct so here is an extract from it of the most pertinent bits:

Apparently, in France their bank statements are all supplied coded directly with the income tax return box where a transaction should be declared. I have always thought the banks should give us some means of categorising our transactions at the “point of sale”. Then statements could be read like a story instead of a mystery.



Hello World 40 Years a public accountant.

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