The taxman is seeking the power to plunder the bank accounts of both individuals and companies to recover unpaid taxes. The proposal would allow HM Revenue & Customs to freeze taxpayers’ bank accounts or deduct directly from salaries without first obtaining a court order.

Under the existing system, HMRC must ask a magistrate or county court to order that money can be taken from a bank account or salary. The taxpayer is given the opportunity to appear in court to defend their case.

Tax experts yesterday said that the proposal was a significant extension of the Government’s powers.

The British Bankers’ Association also expressed concerns with the plan. A spokesman for the BBA said: “Banks will need assurance that HMRC has gone through due diligence processes, that they’ve got the right person, and assessed potential hardship. Our main concern is, if you remove the courts who is going to be the independent arbiter?”

Neil Tipping, an accountant at CCH, the fee protection service, said that the proposal amounted to a move by HMRC to gain “preferential creditor” status, which it does not have. He said: “Businesses may have other creditors, such as small suppliers, who need to be paid. This move could send thousands of small businesses to the wall.”

The proposal, open to public consultation until September 17, will allow HMRC to freeze funds held in the taxpayer’s bank or building society account while making “other attempts to collect the debt”. Where those attempts proved “fruitless”, the money would be paid to HMRC by the bank or building society.

Mike Warburton, of Grant Thornton, the accountants, said that the proposal was a further move away from the “presumption of innocence” historically given to taxpayers. “This shifts the balance of power away from the taxpayer and in favour of the Government,” he said.

The paper states that taxpayers would be informed “immediately” that their funds had been frozen and would then be given the chance to provide evidence of hardship. Taxpayers would still have the right to appeal to the court “if HMRC did not accept that freezing the asset would cause hardship”.

Chris Oates, tax partner at Ernst & Young, the accountants, said: “This is a clear and significant extension of the Revenue’s powers.”

An HMRC spokesman yesterday said that 88.5 per cent of self assessment taxpayers paid taxes on time and the proposals only applied to “chronic latepayers”. The withdrawal would not show up on the taxpayer’s credit record.