HM Revenue & Customs is set to be given sweeping new powers to deduct unpaid tax directly from bank accounts as part of a crackdown on £4billion of outstanding debts.
Chancellor John Healey is expected to announce the measures in the Budget, allowing HMRC to automatically recover money from individuals and businesses who repeatedly ignore demands for payment, without obtaining a court order.
The proposals would significantly lower existing thresholds, potentially allowing deductions for debts of just a few pounds, including outstanding fines and interest.
HMRC estimates that 4.8 million individuals and businesses owe less than £10,000 each, with total outstanding debts of around £4bn.
The move forms part of efforts to close Britain's £60bn tax gap, although tax experts have warned that automated deductions could unfairly penalise vulnerable taxpayers or those disputing their liabilities.
Dan Neidle, founder of Tax Policy Associates, told The Times: “In principle this is a good idea. It excludes cases where people are appealing and applies only where taxpayers repeatedly fail to engage.
"But I do have concerns that an automated system is going to struggle to distinguish deliberate non-payment from illness or missed correspondence. It would be good to understand the safeguards that will be put in place.”
Andrew Griffith, the shadow chancellor, told The Times the move was “absurd”, as he accused Labour of giving the taxman the power to “to empty your bank account over a few hundred pounds and leave you with nothing to pay the rent”.