Initially announced in the 2014 UK Budget, Direct Recovery of Debts (DRD) is where HMRC are empowered to recover debts of £1,000 or more, subject to the stipulation that HMRC would have to leave a minimum £5,000 across any person’s accounts.
This was legislated by Finance (No. 2) Act 2015, specifically clause 51 and Schedule 8 and referred to as ‘Enforcement by Deduction From Accounts’.
DRD was paused during the COVID-19 pandemic and HMRC’s Corporate Briefing says that the power was used 19 times before this.
Point 3.20 of the 2025 Spring Statement said that HMRC will re-start ‘direct recovery’ of tax debts owed by individuals and companies who can pay but choose not to do so. The Statement also said that the UK Government would explore options to automate the process for collecting lower value tax debts.
The same Corporate Report, updated on 22 September 2025 advises that DRD has now re-started in a ‘test and learn’ phase.
For Bookkeepers
It is worthwhile knowing that HMRC have started to use these powers, however, it is also worthwhile pointing to the safeguards that are in place and will be respected. These are to ensure debtors do not suffer undue hardship once money is taken from their accounts plus to protect taxpayers classed as vulnerable.
There is no indication HMRC have changed their stance on only starting DRD where there are tax and tax credits debts of more than £1,000, always leaving a minimum of £5,000 in the debtor’s accounts.
