Overview
- HMRC has resumed its Direct Recovery of Debts powers this week after a pandemic pause, implementing a limited test phase following Spring Statement 2025 approval.
- Banks and building societies can be required to transfer funds from current accounts and cash ISAs directly to HMRC to settle outstanding liabilities.
- Use is restricted to cases with established debts of £1,000 or more where appeal deadlines have passed and repeated contact attempts were ignored.
- Safeguards include a face-to-face visit in most cases, a 30-day appeal window before any transfer, a requirement to leave at least £5,000 in accounts, and removal of vulnerable customers from the process.
- Tax advisers caution that the revived power could trigger disputes over accuracy and urge those in difficulty to seek time-to-pay arrangements, with some coverage noting balances above roughly £6,000 could face deductions.