HM Revenue and Customs (HMRC) says it has started taking money owed directly from debtors’ bank accounts again.
The policy, which was paused during the Covid-19 pandemic, has been restarted in a “test and learn” phase, HMRC said on Monday.
Direct recovery of debts (DRD) is used when a person or business can afford to pay what they owe but are choosing not to, the revenue body said.
The Government said in the spring statement that HMRC would restart DRD for those who choose not to pay.
This allows HMRC to recover money owed by requiring banks and building societies to pay directly from a debtor’s account, and/or funds held in cash Isas.
It may be used where debtors owe £1,000 or more, subject to certain safeguards to ensure that debtors do not suffer undue hardship and that adequate protection is in place for vulnerable customers.
Safeguards include only taking action against those who have established debts, have passed the timetable for appeals, and have repeatedly ignored HMRC’s attempts to make contact.
Anyone who disputes the amount owed has the automatic right to appeal, the revenue body said.
The safeguards also include leaving a minimum of £5,000 in the debtor’s accounts so the revenue body does not put a hold on money needed to pay wages, mortgages or essential business or household expenses.
HMRC said 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, 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.
“For those who are struggling financially we would always recommend that they explore ‘time to pay’ options to allow them to pay in instalments.
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“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 said: “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.”
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