HM Revenue & Customs (HMRC) of the UK has relaunched its Direct Recovery of Debts (DRD) program, allowing officials to seize unpaid tax directly from bank accounts and cash ISAs, as confirmed in a GOV.UK briefing.
The scheme, paused during the pandemic, restarted after the Spring Statement 2025 in a “test and learn” phase, targeting taxpayers who owe over £1,000 and have ignored repeated contact. National media, including The Telegraph, report that HMRC inspectors are already using these powers against non-payers with sufficient funds.
How DRD Works
Introduced under the Finance (No. 2) Act 2015, DRD enables HMRC to recover established tax debts directly from accounts, but only after strict conditions are met. These include failed attempts to contact the debtor, a face-to-face visit to confirm identity and offer a Time to Pay plan, and no open disputes. A key safeguard ensures at least £5,000 remains across all accounts to cover essential living costs, as outlined in HMRC’s policy paper.
Once DRD is initiated, funds are held for a 30-day objection period, during which taxpayers can challenge the action. If objections are rejected, individuals can appeal to a county court on grounds like hardship or third-party ownership, per the GOV.UK DRD briefing. HMRC emphasizes that DRD targets a small minority who can pay but refuse, with prior reviews showing most debts are settled before seizures occur.
Who’s at Risk?
The program applies to:
- Individuals or businesses owing £1,000 or more in tax.
- Those with sufficient funds who have declined engagement or Time to Pay plans.
- Cases where HMRC’s earlier contact attempts have failed.
HMRC’s 2024–25 Annual Report highlights a broader push to reduce tax debt, with DRD part of enhanced enforcement alongside collaboration with Companies House and the Insolvency Service to curb abusive insolvency tactics.
What to Do
Taxpayers receiving HMRC letters about arrears should act quickly. Engaging early and exploring a Time to Pay arrangement can prevent escalation. If DRD is initiated and you believe it’s unfair, use the 30-day objection window or appeal process immediately. Official guidance is available on GOV.UK.
This restart underscores HMRC’s focus on closing the tax gap while balancing debtor protections. Stay informed and act promptly to avoid unexpected account seizures.
