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HM Revenue and Customs (HMRC) has relaunched a programme allowing the direct recovery of tax debts from debtors’ bank accounts.
The Direct Recovery of Debts scheme, which was paused during the Covid-19 pandemic, has restarted under a “test and learn” phase.
It enables HMRC to require banks and building societies to transfer funds directly from debtors’ accounts, including cash ISAs, where at least £1,000 is owed.
Safeguards include action only being taken against individuals who have missed appeal deadlines and repeatedly ignored attempts at contact. HMRC said debtors will receive a face-to-face visit from officials before recovery begins, to confirm the debt and discuss alternatives such as Time to Pay arrangements.
It comes as tax debts remain elevated following the pandemic. The latest figures show £42.8bn is owed to HMRC, well above pre-2020 levels.
The government has committed £630m to strengthen HMRC’s debt recovery, including hiring 2,400 debt management staff. The investment is expected to help collect more than £11bn of additional tax by 2030.
Dawn Register, a tax dispute resolution partner at BDO said: “Given the pressure on public finances, it’s clear that HMRC is determined to get tougher on those who can pay but don’t pay. The relaunch of this draconian power underlines how important it is not to stick your head in the sand and ignore HMRC demands.
“For those who are struggling financially we would always recommend that they explore Time to Pay options to allow them to pay in instalments. HMRC needs to strike the right balance between supporting businesses and individuals in genuine financial difficulty, while being assertive with those who can afford to pay but choose not to.”
She added: “There will undoubtedly be practical challenges for HMRC in using these powers but we hope that the safeguards in place will prevent HMRC from overstepping the mark.”
