HMRC has resumed using its direct recovery of debts (DRD) powers to collect unpaid tax from people and businesses who can pay but refuse to engage.
The mechanism allows HMRC to instruct banks and building societies to transfer funds directly from a debtor’s accounts, including cash ISAs, once other routes have been exhausted. DRD applies to tax debts of £1,000 or more and comes with statutory safeguards.
DRD use was halted during the pandemic and, even before then, was rare: HMRC used it just 19 times in the two years prior to 2020, averaging around 10 cases a year. It is now being reintroduced on a “test and learn” basis.
HMRC says DRD will only be considered after the appeal window has closed and repeated attempts to contact the taxpayer have failed. Before any recovery action, an HMRC officer will visit face-to-face to confirm the taxpayer’s identity, verify the liability and discuss solutions such as a Time to Pay arrangement to spread repayments.
The Spring Statement in March 2025 confirmed the return of DRD and provided £630 million to strengthen debt recovery. HMRC plans to recruit around 2,400 additional collection staff, a programme already underway, with the ambition of recovering £11 billion by the end of 2030.
For most taxpayers who communicate and agree on payment plans, nothing changes. DRD is aimed squarely at persistent non-payers who have the means to settle. If you have outstanding liabilities, engage early with HMRC to avoid escalated enforcement.
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