HMRC’s Direct Recovery of Debts Explained – Advice from JSB Accountants 🏦

 

At JSB Accountants, we always keep our clients informed of the latest changes in tax law and HMRC’s enforcement powers. One of the most significant developments this year is HMRC’s reintroduction of its power to recover unpaid tax directly from taxpayers’ bank accounts. 

 

This may sound alarming, but with the right advice and planning, there’s no need to panic. Below, we explain what’s happening, who it affects, and how JSB Accountants can help you stay protected. 

 

 

HM Revenue & Customs (HMRC) has revived a mechanism called Direct Recovery of Debts (DRD). This allows HMRC to take money directly from individual and company bank accounts to cover outstanding tax liabilities. 

 

Although DRD was first introduced a few years ago, its use was paused during the pandemic. It is now being tested again as part of a “test and learn” phase. 

 

 

HMRC must follow strict rules before moving money out of your accounts: 

 

✅ Debt must be over £1,000 

 

✅ All appeals must be closed – the debt must be finalised 

 

✅ HMRC must try to contact you first 

 

✅ At least £5,000 must remain in your account after recovery 

 

✅ It only applies if you have the means to pay but haven’t done so 

 

In short: this power is aimed at those who can pay but refuse to, not those in genuine hardship. 

 

 

For most of our clients, this change will never become an issue. If you are up to date with your tax affairs or in discussions with HMRC, you will not be at risk. 

 

However, it does underline the importance of: 

 

Responding quickly to HMRC letters and deadlines 

 

Ensuring your accounts and tax returns are accurate and up to date 

 

Speaking to us straight away if you face unexpected tax demands 

 

 

At JSB Accountants, we recommend: 

 

Engage early – If HMRC contacts you about tax owed, don’t ignore it. 

 

Consider “Time to Pay” arrangements – HMRC often accepts affordable payment plans. 

 

Seek professional help – We can review your tax position, check the accuracy of HMRC’s claims, and negotiate on your behalf. 

 

Stay compliant – Regular bookkeeping, timely tax returns, and proactive planning reduce the risk of issues. 

 

 

We work with individuals and businesses to ensure HMRC’s new powers never become a problem. Our team can: 

 

Review your tax position and identify risks 

 

Handle HMRC correspondence on your behalf 

 

Negotiate fair payment terms if needed 

 

Provide tailored tax planning to avoid future disputes 

 

 

HMRC’s renewed power to recover tax directly from bank accounts is a strong reminder of how important it is to stay on top of your tax obligations. With the right advice and support, you can avoid unnecessary stress and focus on growing your business or managing your personal finances with confidence. 

 

If you are worried about an outstanding tax bill, or simply want reassurance that your affairs are in order, get in touch with JSB Accountants today. We’re here to protect your interests and give you peace of mind