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HMRC will begin taking money directly from bank accounts in the government’s latest bid to crackdown on unpaid tax, it has confirmed. The Labour Party's bid means HMRC will bring back its ‘Direct Recovery of Debts’ powers. The powers require banks and building societies to pay directly from the accounts when asked. The Low Incomes Tax Reform Group has warned: “We are seeking clarification from HMRC on the process they will undertake to identify vulnerable customers, how this class of taxpayer will be defined, and the type of support that will be provided.” A briefing from HMRC states: “Some people experience genuine financial difficulty paying their tax. This often happens when their life is affected by a major personal event, or their business develops a problem. READ MORE State pensioners getting free £150 separate to Winter Fuel Payment this week HMRC routinely takes a sympathetic approach to those who need additional support.” DRD enables HMRC to recover tax or tax credits debt straight from taxpayers’ bank or building society accounts, including cash ISAs. HMRC say that DRD can be used “when an individual or business can afford to pay what they owe but are choosing not to.” The DRD process started in 2015 and was put on hold during the Covid pandemic. It was announced in the 2025 Spring Statement that the process would be restarted, and HMRC have confirmed it is now being carried out in a “test and learn phase”. Before taking any money, HMRC staff must visit the person at home or at their place of business. During this in-person meeting they will check that the debt is correct, and talk about alternative ways they can repay the tax they owe, such as a ‘Time to Pay’ plan, and make sure the person isn’t considered vulnerable. If HMRC decides to go ahead they will recover the debt by ordering the bank, building society or ISA provider to place a hold over the funds in the taxpayer’s account. The taxpayer is entitled to a 30-day window to object to HMRC placing a hold over the funds in their account, and further to the county court against HMRC’s decision. The funds will only be accessed when these routes have been exhausted.
