HMRC’s Direct Recovery of Debts (DRD) can be used when an individual or business do not pay their tax liability but choose not to. This is where the individual has debts of £1,000 or more, though, HMRC are required to leave a minimum £5,000 across any person’s accounts.
This power was paused during the COVID-19 pandemic, however, point 3.20 of the 2025 Spring Statement announced this would be restarted and the ‘Issue Briefing: Direct Recovery of Debts’ was published in September 2025. This explains how HMRC are using their DRD powers in a ‘test and learn’ phase.
In this document, it is important to look at two sections:
1. How it works; and
2. The safeguards
On 26 February 2026, HMRC published a new document entitled ‘Your Rights and Responsibilities’. This needs to be read as well as the Issue Briefing.
For Bookkeepers
The publication of this document suggests HMRC have done their testing and learning and are now keen to point out the taxpayer’s rights and obligations when the DRD powers are used. It has five sections:
1. How we can take money from your accounts;
2. Joint accounts;
3. Objections;
4. What happens next; and
5. If you do not agree with our decision
ICB suggests the ‘Objections’ section is the most important as it specifies how a taxpayer only has 30 days to object to HMRC’s DRD decision. After this time, HMRC will issue a ‘hold notice’ to the bank or building society, asking them to put a hold on funds in these accounts.
