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352 Herringthorpe Valley Rd

Stag, Rotherham

S60 4LA

e: info@branagans.co.uk

t: 01709 327 215

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BRANAGANS

Accountancy Services Ltd

01709 327 215 | info@branagans.co.uk

November 2025 | HMRC powers to raid bank accounts for unpaid tax revived

HMRC has once again been given powers to take money owing to it directly from people's bank accounts when people persistently fail to pay the tax due. Most taxpayers, those who pay on time and in full, will have nothing to worry about.

But the small minority that refuse to pay, even though they have the means to, are facing the long arm of HMRC reaching into their bank or building society accounts to pay their outstanding tax bill. There are safeguards in place that should ensure no-one undeserving of this action is affected, but it is important to understand under what circumstances you might face money being taken from your account directly.

These powers were used just 19 times in the two years before being paused during the Covid-19 pandemic. But during the Spring Statement this year, these powers were flagged as being revived, meaning anyone who persistently refuses to pay the tax they owe, could be affected.

RECOVERING DEBT IS IMPORTANT AND FAIR

Most taxpayers - around 90% last year amounting to £858.9 billion - pay their tax on time. The rest became a debt, which must be recovered from individuals and businesses because otherwise its "unfair on the honest majority", said HMRC. The money is also needed to fund public services, and any shortfall could result in a lack of funding for essential support networks.

Most people who miss the first tax deadline pay the full tax owed if they get a reminder. But a minority of individuals and businesses fail to pay even though they can afford to. This is when the Direct Recovery of Debts (DRD), the name of this measure, is used. It has been restarted in what is being called a 'test and learn' phase.

The policy allows HMRC to recover money owed directly from a debtor's account, or from funds held in cash ISAs, where the debt is £1,000 or more. But there are several safeguards in place to prevent HMRC taking money that would put people into a difficult financial position.

WHAT SAFEGUARDS ARE IN PLACE?

The safeguards that prevent HMRC pushing people into financial hardship are listed below, and there is also protection for people who might be seen as vulnerable customers.

The safeguards include:

• Only taking action against those who have established debts, have passed the timetable for appeals, and have repeatedly ignored our attempts to make contact. Anyone who disputes the amount owed has the automatic right to appeal.
• Guaranteeing that every debtor will receive a face-to-face visit from HMRC agents before their debts are considered for recovery through DRD, this meeting will provide a further opportunity for us to:
• Personally identify the taxpayer and confirm it is their debt.
• Explain to debtors what they owe, why they are being pursued for payment, and discuss payment of the debt.
• Discuss options to resolve the debt, including offering a Time to Pay payment plan to the debtor, where appropriate.
• Identify debtors who are in a vulnerable position and offer them the support from a specialist team to help them settle their debts.
• Only debtors who have received this face-to-face visit, have not been identified as vulnerable, have sufficient money in the bank and have still refused to settle their debts will be considered for debt recovery through DRD.
• Only considering the use of DRD on those with tax and tax credits debts of more than £1,000.
• Always leaving a minimum of £5,000 in the debtor's accounts, so that we do not put a hold on money needed to pay wages, mortgages or essential business or household expenses.

Source: Gov.uk

IS IT POSSIBLE TO APPEAL IF YOU THINK HMRC HAS MADE A MISTAKE?

If you think that HMRC has made a mistake, there is a specific and clear process you can go through if you object or appeal. There is a 30-day window once the debt recovery has been initiated, for those owing tax to lodge an objection to the actions of HMRC.

Money will be held in the account, but not transferred, and the decision about the objection will be made within thirty days. Debtors can also appeal an HMRC decision to the County Court on specific grounds, such as hardship and third-party rights.

For most people, it can be when a major life event or business issue arises which creates a cashflow problem, and people can face financial difficulty which makes it hard to pay their tax. HMRC said it "routinely takes a sympathetic approach to those who need additional support". But it is important to get in touch with HMRC in good time, so it knows you need help.

HMRC added: "HMRC is committed to clear governance and transparency. The Commissioners of HMRC will maintain oversight of the use of the power, and statistics will be published on the number of times the power is used, and appeals are raised."

CONTACT US

If you are concerned that you won't be able to pay your tax, or you suspect there could be a chance HMRC may begin moves to recover money from your accounts directly, then please get in touch  with us on 01709 327 215 or email info@branagans.co.uk and we will explain what you need to know.

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