The policy, which was paused during the Covid-19 pandemic, has been restarted in a “test and learn” phase, HMRC said
HMRC to dip into debtors’ bank accounts to recover owed tax (Image: PA Archive/PA Images)
HM Revenue and Customs (HMRC) has announced the resumption of a programme that allows it to directly recover money owed from debtors’ bank accounts.
The policy, which was put on hold during the Covid-19 pandemic, has been restarted in a “test and learn” phase, HMRC confirmed this week.
Direct recovery of debts (DRD) is utilised when an individual or business can afford to pay their dues but are opting not to, according to the revenue body.
In the spring statement, the Government stated that HMRC would recommence DRD for those who choose not to pay.
This permits HMRC to reclaim money owed by instructing banks and building societies to directly debit a debtor’s account, and/or funds held in cash Isas.
It may be employed where debtors owe £1,000 or more, with certain safeguards in place to ensure that debtors do not experience undue hardship and that adequate protection is provided for vulnerable customers.
These safeguards include only taking action against those with established debts, who have exceeded the timetable for appeals, and who have consistently ignored HMRC‘s attempts to make contact.
Anyone disputing the amount owed has the automatic right to appeal, the revenue body stated.
The safeguards also stipulate leaving a minimum of £5,000 in the debtor’s accounts so the revenue body does not freeze money needed to pay wages, mortgages or essential business or household expenses.
HMRC stated on its website: “The vast majority of taxpayers pay their taxes in full and on time, but a minority choose not to pay, even though they have the means to do so.”
Dawn Register, a tax dispute resolution partner at BDO, commented: “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.
“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.”
An HMRC spokesperson added: “Most people pay tax on time and in full – but it’s right that we seek to recover tax from the tiny minority who have the funds to pay, but refuse to.
“These powers are subject to robust safeguards and we’ll continue to support customers who need help with their payments.”
