Tax Authority Can Now Take Money Directly From Accounts and ISAs Without Court Orders
HM Revenue & Customs has officially relaunched its controversial Direct Recovery of Debts program, giving tax collectors unprecedented power to withdraw money straight from taxpayers’ bank accounts and cash ISAs without requiring a court order.
The scheme targets individuals who owe £1,000 or more in unpaid taxes and have repeatedly ignored demands for payment. Chancellor Rachel Reeves granted HMRC these expanded powers in the March 2025 Spring Statement, describing the current phase as “test and learn.”
Originally introduced in 2015, the Direct Recovery of Debts (DRD) program was suspended during the COVID-19 pandemic. Now, with £42.8 billion in outstanding tax debt and government pressure to collect an additional £11 billion by 2030, HMRC is taking a harder line against non-compliant taxpayers.
Who Will Be Affected?
The program primarily targets self-employed individuals and those required to file self-assessment returns, including:
Business owners and freelancers
Property investors with rental income
People earning significant investment returns
Those with substantial savings interest
Built-in Safeguards and Process
Before any money is withdrawn, HMRC agents will conduct in-person visits to verify the taxpayer’s identity and discuss repayment options. The tax authority must also ensure several conditions are met:
Taxpayers retain at least £5,000 in their accounts for essential expenses
A 30-day appeal window has expired
The individual is not classified as “vulnerable”
Multiple payment demands have been ignored
Banks and building societies are legally required to comply with HMRC’s withdrawal requests once these criteria are satisfied.
Expert Criticism and Concerns
Tax professionals have sharply criticized the program’s revival. Dawn Register, a tax dispute resolution partner at BDO, called the powers “draconian” and warned taxpayers against ignoring HMRC correspondence.
“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,” Register said. “The relaunch of this draconian power underlines how important it is not to stick your head in the sand and ignore HMRC demands.”
Register also expressed hope that existing safeguards would prevent the tax authority from overstepping its boundaries, while acknowledging the practical challenges HMRC faces in implementing these powers fairly.
Government Investment in Debt Collection
To support its enhanced collection efforts, the government has invested £630 million in HMRC’s debt recovery capabilities, including hiring 2,400 additional debt management staff members.
This investment reflects the significant increase in unpaid tax debt compared to pre-pandemic levels and the government’s determination to close the tax gap through more aggressive collection methods.
The program represents a fundamental shift in how HMRC approaches tax collection, moving from traditional court-based recovery to direct account access for persistent non-payers.
