HMRC debt recovery powers to raid bank accounts ride roughshod over Magna Carta principles

Dia Chakravarty
Magna Carta advocated the principles of property law and due process on which countless legal systems have developed (Source: Getty)
Buried in the hefty tome presented to the House of Commons at the Budget last week were these 36 words: “Direct recovery of debts – This government will introduce legislation to modernise and strengthen HMRC’s powers to recover tax and tax credit debts directly from debtors’ bank and building society accounts, including funds held in cash ISAs.”
On the eight hundredth anniversary of Magna Carta, politicians have taken every opportunity to pay tribute to it. They claim to be worthy custodians of that Great Charter, which sowed the seed of the notion that nobody, not even the Crown, is above the law of the land. It advocated the principles of property law and due process on which not just our own but countless other legal systems have developed.
It is a sad irony, therefore, that in the year of that momentous anniversary the government has decided to introduce a thoroughly illiberal piece of legislation which flies in the face of long standing property rights, granting HMRC the right to remove money directly from the bank accounts of perceived debtors without involving the courts. The threat of the proposal is compounded by the fact that HMRC failed to get the tax bill of several million people right last year.
There are further serious concerns. The plan allows HMRC to issue a “hold notice” if “it appears” that there is a debt and HMRC is “satisfied” the taxpayer is aware of the debt. The hold notice freezes the bank account of the taxpayer, subject to a minimum £5,000 allowance left in the taxpayer’s control. While the taxpayer has 30 days to object to a hold notice, there is no time limit within which HMRC must respond to the objection. And the taxpayer cannot appeal to the court for a suspension or cancellation of the hold notice until HMRC has responded.
While £5,000 may be enough to live on for a while, the proposal makes no distinction for companies. Depending on the size of a company, a £5,000 allowance could leave it bankrupt within days, without the possibility of appeal until HMRC chooses to respond.
In HMRC’s consultation response to the proposed legislation, a great deal of importance was given to face-to-face meetings with the taxpayer before a hold notice is issued. However, no such obligation is actually written into the draft legislation. More widely, HMRC’s response relied on the promise that it would only pursue genuine tax avoiders who owed a real debt, and that it would act reasonably and competently in using the powers.
This misses the basic point of good legislation: that protection against government actions needs to deal with situations where the state and its agencies have acted unreasonably or incompetently. This is a fundamental tenet of rights of appeal and protections of citizens’ rights. Given the fact that HMRC regrettably has a history of error in working out people’s tax, the safeguards against HMRC errors need to be particularly robust and comprehensive, especially given the critical consequences which an erroneous bank account freeze could have.
Magna Carta espoused the Crown being subject to the same law as everybody else and timely access to justice. The draft legislation – as it stands – puts the Crown in a superior position in recovering debts over ordinary individuals and businesses, and denies taxpayers access to courts and judicial remedy for an indeterminate period while their accounts remain frozen.
A group of rebel barons are discovered to be plotting to kill the highly unpopular King John. The rebel leader Robert FitzWalter had previously claimed John had tried to rape his daughter.
July 1214
King John is defeated at the Battle of Bouvines. He attempts to raise cash from the barons, prompting rebel barons to organise again. They demand he confirm an older Charta of Liberties, declared by Henry I a century before.
January 1215
King John calls a council to discuss possible reforms. An initial document is produced by the barons.
May 1215
Rebel barons renounce feudal ties to John
June 1215
King John meets rebels at Runnymede, near Windsor, where he is presented with a series of demands called the Articles of the Barons. The agreement, renamed Magna Carter and approved on 15, promised protection of church rights, protection from illegal imprisonment, access to swift justice and limitatons on tax and other payments to the crown.
July 1215
John appeals to Pope Innocent III claiming Magna Carter compromises his rights as a feudal lord. The pope excommunicates the barons and later declares the charta “null and void of validity forever”.
Autumn 1215
First Barons' War erupts, although settles into a stalemate with the rebels supported by the future French King Louis VIII.
October 1215
King John dies, and is succeeded by nine-year-old Henry III.
November 1216
Henry III's government wins over rebel barons by promising to return their lands; issues the Great Charta of 1216.
Henry III's government attempts to reassert authority over properties and revenues in the counties. Henry claims he is bound by the chartas.
Louis VIII invades Henry's French territory. Barons agree to support Henry in exchange for a new charta, declaring they were issued of his own “spontaneous and free will”, and confirming them with the royal seal, giving the new Great Charta more authority than previous versions.
Barons seize power from Henry citing the need to strictly enforce Magna Carter, claiming the king had broken its terms. After Louis backs Henry the Second Barons War begins.
Henry issues Statute of Marlborough, including a fresh commitment to observe the terms of Magna Carta
14-15th centuries
Magna Carta is reaffirmed as many as 45 times, but gradually drops out of English political importance. It remains an important text for lawyers, particularly for property rights.
Bill is presented to parliament to renew Magna Carta. Charles I failes to confirm this claiming it would reduce his independence as king. MPs increasingly scour Magna Carter for ammunition against him.
English Civil War begins
Charles I is executed. Oliver Cromwell heads up the Protectorate. Although he famously dismisses the charta as the "Magna Farta" he accepts some limits on his powers, agreeing to rule with the advice of his council
The Habeas Corpus Act – Latin for “you may have the body” is passed, strengthening the Magna Carta's stance on individual liberty.
Glorious Revolution, in which William of Orange and Queen Mary stage a coup against Mary's father James II. Declaration of Rights is included as part of their accession, which is enacted by parliament as a new Magna Carta.
Revolutionary Massachusetts adopts an image of an American patriot holding a sword in one hand and Magna Carta in the other as its state seal.
Bill of Rights includes an article promising that no person shall be ‘deprived of life, liberty, or property without due process of law’, paraphrasing the Charta’s 39th chapter.
17 of the 1225 Charta's chapters are stricken from the statute book, a process that is repeated in 1880.
UK offers US an original copy of Magna Carta to persuade America to enter World War II. Britain had to riscind the offer because the government did not own the document. The US joined after the bombing of Pearl Harbor some months later.
A memorial, created and paid for by the American Bar Association, is unveiled at Runnymede.
Only four chapters left intact in legislation
800-year anniversary of Magna Carta

Related articles