Since getting married I say this less and less, but I know I’ll regret this in the morning. Nevertheless, here’s my exchange with a PhD student who wrote to me on the Direct Recovery of Debts. I’ve called him Adrian.
Sent: 11 July 2014 08:51
To: Jolyon Maugham
Subject: Some questions about Wednesday evening
I attended your discussion at the RSA on Wednesday evening. I am interested in the position you put forward as I am currently working on a PhD in Tax Policy and Jurisprudence at [DELETED].
If I understood your point correctly, you had identified a problem, namely a cost to HMRC in the recovery of “undisputed” debts. I use quotation marks as there appears to be some dispute over whether, in fact those debts are indeed disputed. Your put to the audience several times that if not direct access to bank accounts then what alternative?
In addition, you were of the view that the real question was not whether the administration ought to be able to take direct action against individuals in respect to the seizing of assets without necessary recourse to the courts, but rather, are there sufficient safeguards. You also suggested that the condoc implied some sort of court procedure in granting consent for this process.
Dealing with each of these points in turn.
1. Very often in practice, it appears that there are many instances of HMRC acting in error. The court procedure would, if applied correctly, eliminate or at least mitigate errors of HMRC prior to any attempt to seize assets. Whilst there can be little doubt that this procedure is more expensive to HMRC, isn’t the point of the court procedure to protect individuals from HMRC error making?
If it turns out that HMRC are correct in their assessment, those costs are recoverable through the county court procedure and therefore the costs are recovered or mitigated. I don’t believe you answered Keith Gordon’s assertion that it is only when HMRC make errors that the costs consequences are incurred, but if HMRC incur costs in those instances, it is correct that the taxpayer is protected.
2. Safeguards within the administration of government can only really go so far. They are applied by the administration themselves and therefore subject to a degree of assessment which, by its very nature, is coloured by the relationship between the assessor and their paymasters. My specific research looks at the GAAR, and in the case of the Panel, there are some real questions over the degree of independence given the direct recruitment of those individuals by HMRC itself.
Isn’t it the case that our legal system, providing an independent forum for the resolution of disputes between individuals and government provides the best possible safeguard against error or bias judgement? I wondered why you believed that an individual or group of individuals whose livelihoods or recruitment depended on one side of the dispute could possibly provide the same sort of protection than a court?
3. My final point relates to the cost or efficiency of solving problems.
There can be little doubt that direct access to individuals bank accounts would invariable reduce the perceived “gap” between the amounts of money HMRC believe they are owed and the sums of money they are able to recover. It does seem, however, that there are many ways in which the “problem” can be resolved but all of them must operate to preserve basic rights and protect the system of law.
The real point of the evening was to assess whether HMRC were going too far, not whether there was a problem – which it seems to me was widely acknowledged. There are many problems in society that could be addressed by a more interventionist government taking more aggressive steps to eliminate its perceived ills for society. We could, for example execute criminals because prison numbers are too high, we could engage in euthanasia because the elderly are expensive and a drain on NHS resources. Isn’t the whole point of discussions such as Wednesday to debate the holding back gray men in suits from exercising too much power, using the apparatus of the state, threatening people with seizure of property or imprisonment?
I am seriously concerned that the powers currently being proposed for HMRC, in addition to the ones they already have will erode basic freedoms within our country. I don’t believe that, for example the GAAR, permits anything other than a discretion for the administration to ignore Parliament – albeit they would need to convince a court of such a course of action (probably the reason why there are no cases at the moment).
I wondered how much faith you really had in the arguments you were putting forward when considering all that stands between us and creeping totalitarianism is the rule of law and a legal system that has until now been intolerant to demands from increasing discretionary power?
From: Jolyon Maugham
Sent: 11 July 2014 09:41
Subject: RE: Some questions about Wednesday evening
It’s absolutely my view that DRD is – with one or two modest adjustments to safeguards – a policy that we will look back on a decade hence with a degree of bafflement at the views many of us held about it on its proposal. I don’t accept much of your characterisation of DRD or how it operates but I guess there’s a prior difference between us. You seem to see the world in terms of absolutes and I, absolutely, see it in terms of policy choices.
I am not quite sure what you are suggesting about my views when you talk of executing prisoners to ease overcrowding or killing the elderly to ease pressure on the NHS. But to close your eyes to the effects on the NHS of narrowing the £4.4bn tax gap (of monies lost to the fisc through non-payment of tax debts) seems to me a rather odd way of looking at the world.