HMRC Resumes Direct Bank Account Seizures to Recover Unpaid Taxes
HM Revenue & Customs (HMRC) has confirmed that tax inspectors have begun seizing funds directly from the bank accounts of individuals and businesses who fail to pay their tax bills.
Under its “direct recovery powers,” HMRC can now withdraw money directly from bank accounts or cash ISAs when a taxpayer owes more than £1,000. These powers were first introduced in 2015, but their use was paused during the pandemic.
The initiative was reintroduced earlier this year following approval from Chancellor Rachel Reeves as part of her Spring Statement. HMRC described the current phase as a “test and learn” approach before wider implementation.
Before any funds are taken, HMRC officers must first visit the taxpayer to discuss the debt. The rules also require that:
-
The debtor must be left with at least £5,000 after the funds are withdrawn.
-
The appeal period for the tax bill has fully expired before action is taken.
The move marks a significant escalation in HMRC’s efforts to tackle unpaid taxes and is designed to encourage taxpayers to settle their bills promptly to avoid enforcement action.
Government Moves to Strengthen Oversight of Taxpayer Data
The Government is examining new measures to improve the accuracy of information it holds on taxpayers and the amounts they owe.
In August, HM Revenue & Customs (HMRC) confirmed that it has been using artificial intelligence (AI) to monitor taxpayers’ social media activity, helping to identify potential cases of tax evasion or underreporting.
Further steps are being taken to tighten oversight of savings accounts. From April 2027, banks will be required to collect National Insurance (NI) numbers from both new and existing customers with savings accounts.
This change will make it easier for HMRC to track interest earnings and bill individuals who exceed their personal savings allowance, ensuring tax is correctly applied.
