UK HMRC Relaunches Direct Recovery of Debts to Seize Bank Funds

HM Revenue & Customs has relaunched its Direct Recovery of Debts program in a test-and-learn phase, authorising the tax authority to withdraw money directly from bank accounts when tax bills remain unpaid. The DRD scheme, first launched in 2015, was paused during the COVID-19 pandemic and is now back after Chancellor Rachel Reeves signalled support in the Spring Statement in March 2025. Officials say the program targets taxpayers who can afford to pay but repeatedly refuse to do so, including those who file self-assessment tax returns or derive significant income from investments, second properties and savings interest.

Under the rules, HMRC agents will visit the debtor to confirm the debt and discuss repayment options before any funds are withdrawn. A minimum balance of £5,000 must remain in the account to cover essential living costs, and there is a 30-day window for appealing tax decisions before an order can be executed. The scheme says vulnerable customers will not be targeted, and, in practice, it is expected to apply mainly to those who must file self-assessment returns or have substantial investment income. The program also covers funds held in cash ISAs.

Tax experts have criticized the DRD powers. Dawn Register, a tax dispute resolution partner at advisory firm BDO, said: "Given the pressure on public finances, it’s clear that HMRC is determined to get tougher on those who can pay but don’t pay. The relaunch of this draconian power underlines how important it is not to stick your head in the sand and ignore HMRC demands." Register added that there will be practical challenges for HMRC in using these powers, but safeguards are in place to prevent overreach.

Unpaid tax totals £42.8 billion remain outstanding, and the government says it wants to collect more than £11 billion in additional debt by the end of 2030. To support debt recovery, ministers have allocated about £630 million, including hiring roughly 2,400 new debt-management staff, according to official briefings. The government frames the DRD relaunch as part of a broader effort to close the tax gap and fund public services, while critics warn of potential overreach and the impact on ordinary savers.