Revenue freezing bank accounts over unpaid VAT?

Brendan Burgess

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How common is this practice?

I was told of a case where the Revenue froze a bank account where the VAT or PAYE was 6 weeks late. I expressed severe doubt over the accuracy of the story but was told this was a common practice.

I am surprised that I had not heard it before.

What is the process? Do they need a court order?

Brendan
 

I would not think it is common at all. To freeze a bank account you would have to have a large liablity and maybe a few years outstanding taxes.
They could be a lot more to this story.
 
papervalue said:
I would not think it is common at all. To freeze a bank account you would have to have a large liablity and maybe a few years outstanding taxes.
They could be a lot more to this story.
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I had a friend who had his bank account froze by the Revenue for unpaid PRSI and VAT repayments outstanding for over 1 year and has been ongoing for over 2 years
 
This would be an extremely unusual practice. In 20 years in practice as an accountant I have never encountered it being resorted to by Revenue.
 
Brendan,

This is becoming a more common tactic by the Revenue - they serve an attachment order and in effect they freeze the customer's account - until we get the all clear from the revenue; account stays frozen. We are never privy as to how long the the debt is overdue to the revenue (though we are advised of the amount), which can be relatively small - have seen one for E6k.

On the other side - it seems to solve their problem - as in most cases the order is lifted within a few days (next day in some cases).

Regards,


BM
 
I have seen it in a few cases. Both cases were severely late and the clients had no excuses. It did however work in both cases.
 
I know this is an extremely old post but it came up when I was googling my question and is relevant. Question particularly for anyone in banking, maybe there is a simple obvious answer but how does the customer pay Revenue when the account is frozen and the money to pay them is in the frozen account? There is no other money elsewhere to pay with and there is funds in the account as money is still going in from sales.
 
Monbretia said:
maybe there is a simple obvious answer but how does the customer pay Revenue when the account is frozen and the money to pay them is in the frozen account?
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I'm near certain that revenue can request money to be transferred to them directly by the bank.

The freezing gives you an initial option of paying from another account or coming to a repayment deal with them.

After as period (prob 7 days), they just take their money from your account.
 
ClubMan said:
How can money go in if the account is frozen?
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Don't know but it is, maybe it's just blocked to debits?

peemac said:
After as period (prob 7 days), they just take their money from your account.
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I can't figure out the story I am being told to be honest, if Revenue could just take it out why would they not just do so, bank have said they can't do anything as in send it to Revenue on instructions of customer for example. It's has been nearly two weeks now and no resolution, being dealt with between accountant and Revenue but dragging on!

There is no other account to pay it from, I'm wondering do Revenue think the person has other funds because they don't unfortunately!

It's getting very stressful for those involved at this stage, like half the businesses in the country it's a week to week existence at the moment with rising costs etc, this could be the final nail.
 
Monbretia said:
It's getting very stressful for those involved at this stage, like half the businesses in the country it's a week to week existence at the moment with rising costs etc, this could be the final nail.
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My understanding is that Revenue has been extremely flexible.

So if it's got to the stage of freezing bank accounts, then the fault probably lies more with the taxpayer.

Brendan
 
Brendan Burgess said:
So if it's got to the stage of freezing bank accounts, then the fault probably lies more with the taxpayer.
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That's what I would be wondering too Brendan, all the accounting as such vat payments etc go through the accountants and they seem surprised too by this action, there was definitely a payment that didn't go through the bank due to insufficient funds at the time of the debit. Unfortunately there probably would have been legacy issues after Covid that are probably already on a payment plan.
 
mathepac said:
Not without a court order
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Yes, they can make an attachment order, without a court order. See the details in the manual linked above.

If they wanted a bank account frozen that'd be a court order, but that'd be a different ball game, and I'm not sure if that's actually in Revenue's play book - because attachment effectively means anything coming into the account flows to Revenue, they have no reason for seeking to freeze an account.
 
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torblednam said:
There seems to be some confusion about the nature of the power / action here - it is not the freezing of an account, it is called attachment, and it doesn't apply only to bank accounts.
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I've read that document and as that's not my area of expertise and I understood the worked examples as such but it didn't bring me any closer to following the issue as it being explained to me. This business would have nobody owing them money, it's retail and they would owe suppliers as they bought stock in, income is just from daily sales. There is nothing else to 'attach' to in this case either I imagine.

Blocked actually is the term being used re the bank account whether that makes a difference or not. It seems from that manual that you can just go into Ros and input a payment instruction but I'm assuming this would have to be for a bank account other than this 'blocked' one which of course is the problem as there isn't other money to use. If all the money in the account could flow to Revenue surely they would then just have or take what they need now and release whatever it is they have sent to the bank that has 'blocked' the use of the account.

I'm just trying to deal with a very stressed person and be as supportive as possible, but I'd like to understand the whys and hows that has caused this but of course I'm not privvy to the first hand discussions with accountant which would make it clearer. There is definitely no direct communication between Revenue and the taxpayer as all that is dealt with by accountancy firm. Taxpayer is good at their business (as much as one can be in the present challenging environment) but financial things make the eyes glaze over so not sure if they are taking in or repeating the info correctly. I'd love a chat with the accountant!
 
Monbretia said:
This business would have nobody owing them money, it's retail and they would owe suppliers as they bought stock in, income is just from daily sales. There is nothing else to 'attach' to in this case either I imagine.
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I didn't actually read the document initially, but having had a quick skim now, I see that it is written in a way that assumes a certain amount of knowledge on the part of the reader (who is intended to be a revenue case worker).

I think this is why you're still missing the fundamental point here - the bank is a "debtor" of its customer - it owes them whatever balance of money is in their account. Where an attachment order is issued to a bank in respect of a specific account, any positive balance will have to be handed across to Revenue (subject to any right to off-set that the bank may have, as explained in page 10 of the TDM).

So, if money continues to be lodged to the account (e.g. in the case of a retailer this may include most of their turnover unless they don't accept card payments) then the bank will be required to keep handing that money straight across to Revenue.

In effect, this means there'll be no money in the account for paying anyone or anything else, until the sum specified in the attachment order has been discharged.

Words like blocked and frozen are inaccurate for describing what's happening in the case of an attachment - it's more like Revenue having hijacked the account so that all money flowing into it goes to them, meaning there's none available for withdrawing, or honouring direct debits / standing orders / cheques...
 
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Just to add, as the manual makes clear (and indeed the general lack of familiarity of most posters on this thread confirms) it is considered an exemplary enforcement action that happens in exceptional circumstances, specifically because of the potentially severe consequences of effectively hijacking the cash flow of a business - it is only considered after an extended period of time having passed, and where other forms of enforcement have failed, or there's a history of poor behaviour.

I'd respectfully suggest you don't know the full story here @Monbretia.
 
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torblednam said:
I'd respectfully suggest you don't know the full story here
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I agree, probably not!

I understand better now with your explanation, it is exactly like Revenue have just hijacked the account but the info I am getting is that the amount o/s is not huge and way less than the balance in the account and Revenue don't seem to be taking what is due to them which would sort it all, again based on my knowledge!

I'll have to gently enquire again
 
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