Announcement: HMRC restarts ‘Direct Recovery of Debts’

What is Direct Recovery of Debts (DRD)?

DRD enables HMRC to recover tax or tax credits debt straight from taxpayers’ bank or building society accounts, including cash ISAs.  HMRC say that DRD can be used “when an individual or business can afford to pay what they owe but are choosing not to.”

The DRD process started in 2015 and was put on hold during the pandemic. It was announced in the 2025 Spring Statement that the process would be restarted, and HMRC have confirmed it is now being carried out in a “test and learn phase”.

Who does DRD apply to?

HMRC say DRD will only be used for people or businesses who:

• have tax or tax credits debt of more than £1,000, and
• have ignored repeated letters and calls from HMRC, and
• can pay but refuse to do so.

The above is subject to certain safeguards, as set out below.

How does DRD work?

Before taking any money, HMRC staff must visit the person at home or at their place of business. During this in-person meeting they will:

• check that the debt is correct, and
• talk about alternative ways they can repay the tax they owe, such as a ‘Time to Pay’ plan, and
• make sure the person isn’t considered vulnerable.

If HMRC decides to go ahead they will recover the debt by ordering the bank, building society or ISA provider to place a hold over the funds in the taxpayer’s account.

The taxpayer is entitled to a 30-day window to object to HMRC placing a hold over the funds in their account, and further to the county court against HMRC’s decision.  The funds will only be accessed when these routes have been exhausted. 

What safeguards are in place?

HMRC say there will be a specialist team offering additional support to vulnerable customers with tax debts. We understand such customers will be excluded from DRD action.

  We are seeking clarification from HMRC on the process they will undertake to identify vulnerable customers, how this class of taxpayer will be defined, and the type of support that will be provided. We will provide further information on this in due course.

For all other taxpayers within the scope of DRD, HMRC have confirmed that at least £5,000 must be left in the taxpayer’s accounts after any tax owed has been taken, to ensure that the person or business still has sufficient funds for essentials.

Why now?

Total unpaid tax and tax credits stood at a total of £44billion in March 2025. The government has invested in new staff and systems to help collect this money as part of its strategy to improve compliance and reduce the tax gap. 

What does this mean for taxpayers?

Anyone who is having a problem paying their tax bill should not ignore it and contact HMRC as soon as possible to talk about their debt. HMRC may be able to arrange a payment plan for the person or business to pay the tax owed.

You can read more about tax payment problems and debt in our guidance.

HMRC’s briefing on direct recovery of debt can be read on GOV.UK.