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Direct Recovery of Debts by HMRC

Source: HM Revenue & Customs | | 03/02/2016

The new Direct Recovery of Debts (DRD) powers allow HMRC to target non-compliant taxpayers that owe more than £1,000 and who have sufficient funds in their bank accounts to pay. HMRC will be able to recover debt directly from cash held in bank and building society accounts, in credit, of debtors who have the means to pay but choose not to do so. This includes funds held in cash Individual Savings Accounts (ISAs).

Whilst HMRC has said that these powers will only be used as a last resort, there are measures in place to ensure that a minimum of £5,000 is left in a taxpayers account so as not to create unnecessary financial hardship.

There are also additional safeguards to ensure that adequate protections are in place for vulnerable taxpayers. Those who are identified as vulnerable will not be considered for DRD and will be given alternative support to help them pay the money they owe. This includes those with a disability or long-term health condition, a temporary illness, physical or mental health condition and those with personal issues such as becoming recently widowed or suffering a family bereavement.

New legislation comes into effect on 10 February 2016 that will allow banks to charge up to £55 for administrative costs reasonably incurred in carrying out its obligations under the scheme.

 

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McAllisters is a partnership trading from Paxton House, 11 Woodside Crescent, Glasgow providing accountancy and tax services and general business advice and is a member of ICAS (Registration No 0342) and an FCA exempt professional firm (No 301235). Its VAT number is 261 3019 94

McAllisters (Scotland) Ltd is a related business providing tax and business advisory services to McAllisters and its clients. McAllisters (Scotland) Ltd is registered in Scotland (Registration number SC146856). Its VAT number is 624 0564 62.

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