By Kelly Goodchild, Senior Tax Manager
A policy that was paused at the start of the pandemic has now been reintroduced from 22 September, whereby HMRC has the power to recover tax debts directly from the taxpayers bank account.
This Direct Recovery of Debts (DRD) requires banks and building societies to pay HMRC directly from the taxpayers account or cash ISA when they owe more than £1,000 in unpaid tax.
Safeguards have been put in place as not to cause unnecessary hardship to the taxpayer in question whereby payments can only be taken if:
- A minimum of £5,000 remains in their accounts after the tax is taken
- The debt is over £1,000
- The taxpayer has repeatedly ignored HMRC’s attempts to collect the tax
- The taxpayer has passed the timetable to appeal
This measure shows that HMRC have more powers than ever to recover debt from those who have the funds to pay their tax liabilities but refuse to do so.
Whilst HMRC have insisted that this is only targeted at ‘persistent non-payers’ the move to reinstate the ability to collect tax in this way is a sure sign that HMRC are serious about tackling the rising levels of unpaid tax.
