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HMRC To Resume Direct Recovery Of Debts (DRD)

25 - 09 - 2025

HMRC has confirmed it will resume the direct recovery of debts from taxpayers' bank accounts. 

What is the Direct Recovery of Debts?

HMRC has had the the power to recover unpaid tax directly from individual and business bank accounts for some time.

However the process was paused during the COVID-19 pandemic. The UK Government announced in the Spring Statement 2025 that the process would be reimplemented. The implementation has been restarted on a “test and learn” phase. This means that HMRC are trialling the process.

 

How does it work?

HMRC can recover money it is owed by requiring banks and building societies to pay HMRC directly from a debtor’s account.

 

Does this affect individuals and businesses?

Yes. HMRC can recover money from both individuals and businesses through Direct Recovery of Debts.

 

Can HMRC access all bank accounts?

Yes. HMRC can recover money from any bank or building society accounts including Cash Individual ISA’s.

 

Can HMRC take all of the money in an account?

No. A minimum of £5,000 must be left in the account so that the taxpayer can pay normal living expenses such as mortgage repayments.

 

Can HMRC take money from any tax payer?

HMRC can use the Direct Recovery method where a taxpayer owes £1,000 or more but subject to a number of safeguards.

 

What are the safeguards?

The safeguards are in place to ensure that debtors do not suffer undue hardship once money is taken from their accounts. They also protect vulnerable taxpayers. The safeguards are as follows:

·         Only taking action against those who have:

ü   established debts

ü  passed the deadlines for appeals – anyone who disputes the amount has an automatic right of appeal

ü  repeatedly ignored HMRC attempts to contact them

·         Guarantee every debtor will receive a face- to - face visit from HMRC agents before their debts are considered for recovery through DRD. The meeting will provide a further opportunity for HMRC to:

ü  Personally identify the taxpayer and confirm it is their debt.

ü  Explain to the debtor what they owe, why they are being pursued and discuss payment.

ü  Discuss options to resolve the debt

ü  Identify vulnerable debtors and offer support

ü  Only consider using DRD where the debt is £1,000 or more

ü  Leave a minimum of £5,000 in the debtor’s account.

 

Can a debtor object or appeal?

 

Yes. The process to object or appeal includes:

 

·         Once debt recovery is initiated there is a 30 day window for debtors to lodge an objection to HMRC. Money is held in the account but cannot be transferred during this period.

·         Debtors can appeal against HMRC’s decision to a County Court on specified grounds including hardship and third party rights.

 

 If you would like help with any of the above please do not hesitate to contact us on contactus@foremansllp.com or 01244 625 500.

 

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• The user is over 21 and subject to tax in the UK
• The user wishes to minimise their tax liability
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