HMRC has announced that it has restarted its practice of recovering debts from taxpayers directly from their bank accounts. 

In a programme which was paused during the pandemic, the Direct Recovery of Debts (DRD) policy has been reinstated in a ‘test and learn’ phase.

The DRD policy gives HMRC the power to require banks and building societies to pay funds directly from a debtor’s account or a cash ISA, in order to recover money owed to the tax authority.  This applies to debts of £1,000 or more. 

According to HMRC, around 90% of tax debt was paid on time, with the remaining 10% becoming a debt.  These measures will therefore target those businesses or individuals who can afford to pay what they owe but deliberately choose not to. 

There are a variety of safeguarding measures in place, starting with a face to face meeting with an HMRC agent before any action is taken to retrieve the debt.  This meeting is to discuss the debt and the options available to the taxpayer, and to identify anyone in a vulnerable position and offer additional payment support to them.

Only individuals who have had a meeting with HMRC, have not been identified as vulnerable, have sufficient funds in the bank and still refuse to settle, are considered for DRD. 

If you want to know more, or would like some advice on tax issues, please get in touch.

Internet link: GOV.UK