HMRC has started taking debts directly from people’s bank accounts to recover tax.
Direct recovery of debts (DRD) allows the tax office to take money straight from someone’s bank account if they can afford to pay what they owe but are choosing not to.
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The policy was previously put on pause during the pandemic, but HMRC said this week it has been brought back in a “test and learn” phase.
The government previously said in the spring statement that it would restart DRD for those who choose not to pay.
The policy allows HMRC to recover money owed by requiring banks and building societies to pay directly from a debtor’s account, and/or funds held in cash Isas.
Only those who owe £1,000 or more may see funds taken from their accounts, and debt collectors must make sure debtors will be left with at least £5,000 after the money is removed.
This is to make sure money needed for essential expenses like mortgages, household bills, and wages is not taken.
Other safeguards include only taking action against those who have established debts, have passed the timetable for appeals, and have repeatedly ignored HMRC’s attempts to make contact.
Anyone who disputes the amount owed has the automatic right to appeal, the revenue body said.
HMRC said on its website: “The vast majority of taxpayers pay their taxes in full and on time, but a minority choose not to pay, even though they have the means to do so.”
Dawn Register, a tax dispute resolution partner at BDO, said: “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.
“For those who are struggling financially we would always recommend that they explore ‘time to pay’ options to allow them to pay in instalments.
“HMRC needs to strike the right balance between supporting businesses and individuals in genuine financial difficulty, while being assertive with those who can afford to pay but choose not to.”
An HMRC spokesperson said: “Most people pay tax on time and in full – but it’s right that we seek to recover tax from the tiny minority who have the funds to pay, but refuse to.
“These powers are subject to robust safeguards and we’ll continue to support customers who need help with their payments.”
The reinstatement of the policy comes as the government fights to recover money owed from taxpayers.
Chancellor Rachel Reeves has been trying to boost the public purse after it was revealed she needs to plug a £50billion hole in public finances.
From next April, the government is to give new powers to banks to help identify benefit cheats, while convicted fraudsters could be stripped of their driving licenses.
The DWP has said it will be the “biggest fraud crackdown in a generation”, and it’s estimated the new powers could save taxpayers £1.5billion over five years.
Banks will help to identify customers who might have breached benefit eligibility rules, such as exceeding the £16,000 savings limit for Universal Credit.
They will share limited data with the DWP but can’t provide transaction details, so officials won’t be able to see how benefit claimants spend their money.
Meanwhile, HMRC last month admitted to use AI to spy on workers’ social media posts to find evidence of cheating tax bills.
An HMRC spokesperson insisted the tools are only being used for social media monitoring in criminal investigations, and that it won’t affect the average taxpayer.
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