News
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.
