LITRG raises concerns over safeguards in HMRC's lower-value tax debt proposals
The Low Incomes Tax Reform Group (LITRG) has raised concerns about plans to let HMRC recover lower-value debts directly from taxpayers’ bank accounts, questioning whether the proposed safeguards are sufficient.
HMRC have today published a raft of tax measures and consultations aimed at improving simplicity, modernisation and fairness in the tax system1. Within this, HMRC have launched a consultation2 on ‘tackling lower value debts’ – which appears to be an extension to the current Direct Recovery of Debt powers, currently only used in certain circumstances for tax debts exceeding £1,0003. The proposals suggest HMRC would like to introduce a similar regime targeting lower-value debts – but in greater volumes – making use of automated processes to collect unpaid tax debts directly from bank accounts.
LITRG recognises the importance of collecting tax that is properly due, noting HMRC’s latest tax gap figures published yesterday4. However, it is concerned that some vulnerable taxpayers could be adversely affected if adequate protections are not built into the new process.
Victoria Todd, Head of LITRG, said:
"We understand why HMRC are looking for more effective ways to collect tax debts. However, the proposals raise some important questions about how taxpayers will be protected.
“It is important that, before any action is taken to recover a debt directly, HMRC are satisfied that the debt has been correctly identified and is genuinely due.
"We are particularly concerned that the proposals do not currently include a minimum amount that must be left in a taxpayer's account. For those living on a tight budget, deductions could leave them struggling to meet essential living costs.
"One of the key questions is how HMRC will assess what is affordable where a taxpayer has not engaged, or cannot engage with them. Without up-to-date information about an individual's circumstances, there is a risk that deductions could be set at an unaffordable level.
“HMRC will need to be confident that they can correctly identify potentially vulnerable taxpayers and distinguish them from those who are simply choosing not to engage.
“We welcome HMRC’s recognition that strong safeguards and clear routes for taxpayers to challenge decisions will be essential.”
Notes for editors
- See HMRC policy paper on GOV.UK: Tax update 2026: simplification, modernisation and fairness summary
- Consultation available on GOV.UK: Proposals to tackle lower value tax debts - GOV.UK
- See HMRC Corporate report (updated 11 June 2026): Issue Briefing: Direct Recovery of Debts - GOV.UK;
- See HMRC official statistics (published 23 June 2026): Tax gaps: Summary - GOV.UK
