HMRC will return to recovering debts directly from bank accounts

HMRC will return to recovering debts directly from bank accounts

HMRC has announced that they will re-start the use of direct recovery of debts (DRD) for individuals and businesses who do not pay the tax they owe, after HMRC paused the use of DRD during the pandemic.

‘Direct Recovery of Debts (DRD) is used when an individual or business can afford to pay what they owe but are choosing not to,’ HMRC said.

Under DRD, HMRC can recover money owed by tax non-payers by asking banks and building societies to pay directly from a debtor’s account, and/or funds held in cash ISAs. It can be used where debtors owe £1,000 or more, subject to safeguards.

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, which can spread repayments over an agreed timeframe.

The relaunch of this power underlines how important it is not to stick your head in the sand and ignore HMRC demands, however 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.

The government announced the return of DRD in the Spring Statement in March 2025.