HMRC Reinstates Power to Seize Unpaid Taxes From Bank Accounts
HM Revenue and Customs has resumed using Direct Recovery of Debts to seize unpaid taxes directly from bank accounts without requiring a court judgment.
The HM Revenue and Customs (HMRC) has reinstated the Direct Recovery of Debts (DRD) method, allowing the department to seize unpaid income tax, national insurance, and VAT directly from current or savings accounts. This enforcement power, which was paused during the Covid-19 pandemic, enables the agency to recover funds without first obtaining a county court judgment.
To mitigate undue hardship, HMRC will only apply DRD to accounts containing more than £1,000 and must leave a minimum balance of £5,000. For individuals, the process is triggered only after appeal timetables have expired and a face-to-face recovery visit has taken place. Businesses are provided multiple opportunities to discuss repayment plans before funds are seized.
Once the agency seizes funds, the money is frozen for 30 days. This window allows debtors to object or appeal the action before the funds are permanently transferred to the government. Claire Cox, operator of the Debt Crisis To Clear UK social media page, has warned that ignoring HMRC is more dangerous than ignoring other creditors because the agency possesses unique enforcement powers to remove goods or apply for bankruptcy directly.
