HMRC resumes direct recovery of debts (DRD)

DRD allows HMRC to obtain tax owed directly from a bank or building society account of a taxpayer. HMRC will apply this in circumstances when an individual or a business is deemed to be able to pay what is owed to HMRC but are not currently making payments.

The DRD collection method was in place before the covid pandemic, but the government has begun gradually rolling this out again from Autumn last year, this is part of their “test and learn phase.” The renewed use remains tightly controlled and is initially limited to a relatively small number of businesses and individuals.

How will DRD work

Before attempting to seize any funds, HMRC will aim to conduct face to face meetings with a taxpayer at their home or place of business. This is so it can be checked whether the debt is correct and try and find an alternative way for it to be settled (such as a payment plan). If HMRC deem the debt can be collected this way after this meeting, the tax payer has 30 days to object to HMRC collecting funds this way.

Who may be contacted

HMRC have stated that the DRD will only apply to individuals and businesses that meet all of the criteria below:

• The have a tax debt of or in excess of £1,000.
• They have chosen to ignore previous HMRC correspondence concerning the outstanding debt owed.
• They are judged to be able to pay but are not willing to do so.

Next steps

If you do receive correspondence from HMRC about an outstanding tax bill this should not be ignored and HMRC should be contacted as soon as possible. It may well be that a payment plan can be agreed with HMRC to help manage the payment of any outstanding debt.

If you have received such a letter from HMRC and require any assistance with this, please contact Joe Wilson on 023 8046 1237 or email Joe Wilson.