HMRC claims power to take money from bank accounts has saved £13m through side-effect
The tax office claimed that giving HMRC the power to withdraw money directly from bank accounts has already saved the government £13 million due to the “chilling effect” of the measure.
Controversial ‘Direct Collection of Debts’ powers were introduced a decade ago but were paused during the pandemic. HMRC has regained its powers since September last year following the decision taken by Chancellor Rachel Reeves in her Spring 2025 Statement.
Under the policy, banks, building societies and ISA providers are required to make payments directly from accounts when requested.
HMRC claims the powers will only affect a “minority” and focuses on businesses and individuals “who are able to pay their debts but choose not to”. Orders can be placed with banks, building societies and ISA providers.
Since the powers were reinstated, HMRC has claimed a total of £225.00 from accounts in 12 instances. This equates to £18,750 per borrower.
But the tax office says a far more effective side effect of the measure is to deter tax avoiders from breaking the rules.
Nimesh Shah, managing director of accountancy firm Blick Rothenberg, said: “I am not convinced this is a sensible tool for HMRC to use
“This seems like a double whammy, especially at a time when businesses and individuals are struggling with increased tax burdens as a direct result of government tax changes,” he said. Telegram.
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The tax office was first able to use its powers in 2015 but suspended bailouts during the Covid pandemic. Between 2015 and 2018 it made just 19 direct recoveries, generating refunds of £361,678.
HMRC says the powers can only be used if certain criteria are met and “strict safeguards” are in place. To be subject to direct collection, the debtor must owe £1,000 or more, have ignored HMRC communications, and must be able to pay but refuse to do so.
The tax office has also said it will not take money from an account that will have less than £5,000 after recovery.
Before receiving any money, an HMRC representative must visit the person at their home or workplace. During this meeting they will check the accuracy of the debt, discuss alternative ways they can repay the tax they owe, and make sure the person is not vulnerable.
An HMRC spokesman said: “Most people pay tax on time and in full, but it is right that we try to collect tax from the small minority of people who can afford to pay but refuse to pay.
“More than £13 million has already been paid or included in payment schemes for public services due to the chilling effect of this measure.”
