HMRC Regains Power to Seize Unpaid Taxes Directly from Bank Accounts
The tax authority, HM Revenue & Customs (HMRC), has been granted the authority to access individuals’ bank accounts directly to recover unpaid taxes. This move, known as Direct Recovery of Debts (DRD), allows HMRC to collect money owed by debtors who owe more than £1,000.
Initially launched in 2015, the DRD scheme was temporarily suspended during the Covid-19 pandemic but has now been officially reinstated. Chancellor Rachel Reeves approved the reintroduction of these powers during the Spring Statement in March 2025.
The primary targets of this scheme are individuals who have the means to settle their tax liabilities but have consistently failed to do so, particularly those who submit self-assessment tax returns. Before any funds are withdrawn from their accounts, taxpayers will receive a visit from HMRC agents to verify the debt, discuss repayment options, and ensure a minimum balance of £5,000 is maintained for essential expenses.
Individuals classified as ‘vulnerable’ will not be subjected to this enforcement measure. However, some tax experts have criticized the reintroduction of these powers, labeling them as draconian and emphasizing the importance of addressing tax obligations promptly.
According to government data, HMRC is currently owed £42.8 billion in unpaid taxes, a figure that has increased significantly due to the pandemic. The government aims to recover an additional £11 billion in outstanding debts by the end of 2030, investing £630 million in enhancing HMRC’s debt recovery capabilities, including the recruitment of 2,400 new debt management personnel.
An HMRC spokesperson stated that while the majority of taxpayers fulfill their obligations punctually, it is essential to pursue those who deliberately evade payment. They assured that the powers granted are accompanied by stringent safeguards and reiterated the commitment to assisting individuals facing payment difficulties.