In this year’s budget the government proposed a new Direct Recovery of Debts (DRD) scheme. This would allow HMRC direct access to personal and corporate bank accounts – including building society accounts and Individual Savings Accounts (ISAs) – and the power to seize unpaid taxes without having to apply for court approval.
Reasoning behind proposed DRD scheme
HMRC’s analysis shows that some taxpayers and tax credits claimants who owe debts to HMRC have sufficient funds held in accounts to clear their debt. However, they choose not to pay, despite HMRC having attempted to arrange payment on a number of occasions. The current processes for recovering debts from these accounts can be costly, both for HMRC and for the debtor. This policy will modernise HMRC’s methods for recovering debt, bringing the UK in line with other countries that already use similar powers.
The Treasury released this letter:
The Direct Recovery of Debts, announced at Budget 2014, will modernise and strengthen HMRC’s ability to recover tax and tax credit debts from those who are refusing to pay what they owe. It will help to level the playing field between those who pay what they owe, when they owe it, and those who do not. And it will help ensure that compliant businesses do not face unfair competition from others who try to gain an undeserved financial advantage by dodging or delaying their tax payments.
Tax authorities in many advanced economies already use similar powers routinely and responsibly. In