By Simon Walters and Tony Hetherington
Tax with menaces: We’ll take your TVs, cars and laptops and sell them for pittance, ‘thuggish’ Revenue warns late payers in bizarre begging letter
HM Revenue chiefs were accused of acting like ‘thugs’ yesterday by threatening to seize the cars and televisions of people who owe tax and sell them for a pittance.
In a secret crackdown designed to humiliate those who fail to settle unpaid tax bills, HMRC has adopted a provocative twin-track approach to those do not pay up promptly. It involves:
A menacing threat to seize their possessions and auction them off publicly for a fraction of their real value.
Begging them to pay up, saying if they refuse, the Government will run out of money to treat the sick and educate the nation’s children.
The initiative, which could see £2,000 flat-screen TVs being sold for as little as £200 and £800 laptops for £100, was denounced by MPs last night as ‘outrageous’.
It is illegal for debt collectors to barge into a person’s home and seize goods: they need a court order. And the Government’s own strict rules for private debt collectors ban them from making such idle threats.
However, extraordinarily, the Revenue is not covered by the rules because it is a Whitehall department.
Tony Hetherington, the Financial Mail on Sunday’s readers’ champion, has obtained a letter – which HMRC bosses confirmed is genuine – which was sent to an individual accused of owing more than ￡2,000 in tax.
Sent from the HMRC office in Croydon, Surrey, it asks the individual concerned to pay more than ￡2,000 ‘to avoid extra tax costs’.
It continues: ‘Since I last wrote to you, most of those still owing tax have paid, making their contribution to the vital services we all depend on.
‘We still haven’t received your tax payment, and my team are now focusing attention on the rapidly reducing number of people like you who have yet to pay. Not paying your tax on time has serious consequences. We must collect this tax from you to pay for the hospitals and schools we all rely on.
‘We will do that by taking your possessions and auctioning them publicly. We don’t like doing this because people have told us it is embarrassing for them and it will cost you so much more to pay this way.
‘For instance, if your car is worth several thousand pounds, it might sell for only a few hundred pounds at auction, a flat-screen TV costing ￡2,000 would typically sell for about ￡200-￡300, and an ￡800 laptop would sell for about ￡100.
‘To avoid this, please call one of my team on the number at the top of this letter to pay by debit or credit card. Some people who have a problem paying their tax bury their head in the sand. In fact, many people find that speaking to us helps.’
The aggressive tactic is being deployed by HMRC to target thousands of people among Britain’s ten million self-assessment taxpayers who have failed to respond to tax demands.
Liberal Democrat MP John Thurso said: ‘This is outrageous. Clearly, people should pay their tax on time but the vast majority of people who don’t either have valid reasons or are in real difficulties.
‘This authoritarian and frightening language is unlikely to get anybody to co-operate – it will frighten the life out of them. It also risks politicising tax gathering by singling out some types of public spending over others.’
But HMRC says the letters have been a big success and helped reduce unpaid taxes by nearly ￡6 billion in 18 months. ‘We see nothing wrong with reminding people that taxes pay for public services,’ said a spokesman. ‘If someone doesn’t pay their taxes we all suffer. We all have rights as taxpayers but we also have responsibilities, one of which is to pay our taxes on time. It is a matter of fact that the largest chunk is spent on hospitals.’
The threatening tone of the letter is in stark contrast to HMRC’s official website. Buried in thousands of pages of advice, it admits it has no right to march into homes and seize goods. It says: ‘We cannot use force to enter your premises to distrain, unless authorised by a Justice of the Peace.’
Moreover, the National Debtline, a Government-backed charity that advises people who owe money, makes it clear that debt collectors cannot just walk in and seize goods.
Callers to the National Debtline are referred to Office of Fair Trading rules which say: ‘You do not have to let the bailiffs in to your home. If you refuse entry to a collector they can apply for a warrant to break in to your home but this is hardly ever done.’
Debt collectors who make idle and bogus threats to get money out of people are stripped of their licences. But crucially, the OFT rules do not apply to HMRC.
A private debt collector would never write anything as threatening as this
By TONY HETHERINGTON
My first thought was that the tax collector’s letter was a fake. Its bizarre mixture of pleading and threats is unlike anything I have seen from Revenue & Customs. And it would be unacceptable if it were from a private debt collector.
So, let’s get one thing straight – this letter is genuine and Revenue officials confirm that it is part of a new drive to make people pay.
I asked repeatedly why the letter does not say that it needs the money to pay MPs’ expenses, or to prop up the euro, or to fund the ￡650 million we have just decided to give to Pakistan, a country that can somehow afford its own nuclear weapons.
The Revenue spokesman would only say: ‘It is not for me to enter into a political discussion about how our taxes are spent, but it is a matter of fact that some expenditure is on hospitals.’
And he added: ‘The letters have proven highly effective at prompting debtors to pay the tax due or to contact us if they anticipate problems paying.
‘We have successfully improved our performance, bringing in around 99 per cent of collectable debt. We see nothing wrong with reminding people that taxes pay for public services.’
Fair enough – but I am sure that when this letter was drafted, someone did make a political decision along the lines of: ‘Whatever you do, don’t mention MPs’ expenses, or bailing out the eurozone, or anything else that might actually encourage people not to pay us.’
And setting this aside still leaves the threats. Fail to pay up, even if it means borrowing on your plastic, and the Revenue will get its money anyway: ‘We will do that by taking your possessions and auctioning them publicly.’ Your ￡2,000 TV will go for ￡200, your ￡800 laptop for ￡100, and so on.
But there is something missing here, and it is something important. The taxman cannot simply say that as you have not paid, he is helping himself. Like a vampire, he can only cross your threshold if you invite him in.
He cannot force his way into your home unless he applies for a legal warrant first.
A private debt collector who gave the false impression that he could simply march in and take your TV would be jumped on by the Office of Fair Trading.
The Revenue’s response to this was to tell me that the rules are on its website. This is true – buried among thousands of pages. But there is no mention of these rules in the threatening letter.