HMRC to dip into bank accounts to recover tax debts
HMRC to dip into bank accounts to recover tax debts
A new briefing from HMRC has confirmed that the tax authority has relaunched its programme to recover tax owed by debtors directly from their bank accounts.
The Direct Recovery of Debts (DRD) programme, which was paused during the COVID-19 pandemic, has now officially restarted in a ‘test and learn’ phase.
The policy allows HMRC to recover money owed by tax debtors by requiring banks and building societies to pay directly from a debtor’s account, including funds held in cash ISAs.
The tax authority will be able to recover money where debtors owe £1,000 or more, subject to a number of safeguards.
For example, HMRC will only take action against those who have passed the timetable for appeals and have repeatedly ignored attempts to make contact.
Before debts are considered for recovery through DRD, every debtor will receive a face-to-face visit from HMRC agents to personally identify the taxpayer to confirm it is their debt and to discuss options to resolve the debt, including through Time to Pay arrangements.
The latest figures show that there is £42.8bn in tax owed to HMRC which remains unpaid - with the amount of unpaid tax significantly higher than pre-pandemic levels.
The Government recently announced £630 million of investment in HMRC’s ability to recover debt, which includes 2,400 new debt management staff. This investment is designed to enable the tax authority to collect over £11 billion more debt by the end of 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.
“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.”
ENDS
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