The committee said that implementing the proposals without a consultation would be “wholly unacceptable”.
The proposals, announced by chancellor George Osborne in this year’s Budget, have so far been met with scepticism, with Association of Chartered Certified Accountants even labelling them ‘wholly draconian’.
But the Treasury has defended the measures, pointing to safeguards ensuring that HMRC will only be able to remove the money when four requests for the tax have been ignored, when the money due is more than £1,000 and when there will be £5,000 in the account afterwards.
The new powers could affect around 17,000 a year and are expected to generate around £100m annually.
The committee, led by Conservative MP Andrew Tyrie, cited the concerns of Patrick Stevens, tax policy director, Chartered Institute of Taxation, who said that regardless of safeguards the policy does rely on accuracy on the behalf of the authority.
It added that in the past HMRC have made serious errors, before referencing the authority’s loss of two computer discs containing sensitive child benefit data in 2007.
“This policy is highly dependent on HMRC’s ability accurately to determine which taxpayers owe money and what amounts they owe an ability not always demonstrated in the past,” it said. “Incorrectly collecting money will result in serious detriment to taxpayers.”
It also said that granting HMRC the powers would raise concerns about the risk of fraud and error, something which must be covered be covered by a consultation.
However, chancellor George Osborne defended the proposals, arguing that they can be justified because the department for work and pensions (DWP) already has the right to take money directly from people’s bank accounts to pay child maintence.
He added that the power for tax authorities to take away money directly would not be unique to the UK.
But the committee argued that the parallel was not exact because in those cases DWP is acting as an intermediary between two individuals, while HMRC would be acting in pursuit of its own money gaining objectives.
It also referenced HMRC’s new consultation document outlining the authority’s new debt recovery powers which was released last week.
It said the document appeared “to have been produced in haste” and “will need further and extensive examination”.
