The tax authorities have been given expanded powers to directly access individuals’ bank accounts and recover outstanding taxes from those who have not fulfilled their tax obligations.
HM Revenue & Customs (HMRC) now has the authority to retrieve funds directly from accounts of debtors who owe more than £1,000 to HMRC, including cash ISAs. This move, known as Direct Recovery of Debts (DRD), was initiated in 2015 but was temporarily halted during the Covid pandemic.
The scheme has been reintroduced by HMRC following approval from Chancellor Rachel Reeves in the Spring Statement of March 2025. It aims to target individuals who have the means to pay their taxes but have persistently evaded doing so, mainly focusing on self-assessment taxpayers like self-employed individuals or those with substantial income from investments, properties, or savings.
Before any funds are withdrawn from their accounts, taxpayers will be visited by HMRC agents to verify the debt, discuss repayment options, and ensure the availability of at least £5,000 in the account for essential expenses. Additionally, individuals have a 30-day window to appeal before HMRC can access their funds directly.
HMRC has stated that individuals classified as ‘vulnerable’ will not be subjected to this scheme. Nevertheless, some tax experts have criticized the new powers, emphasizing the government’s drive to recover outstanding taxes amidst the challenging financial landscape.
Government data reveals that HMRC is owed £42.8 billion in unpaid taxes, a figure that has surged significantly post-pandemic. The government aims to recuperate an additional £11 billion in outstanding debts by 2030 and has allocated £630 million to enhance HMRC’s debt recovery capabilities, including hiring 2,400 new debt management personnel.