Direct Recovery of Debts: When HMRC Takes Money From Your Bank Account

HMRC can take an established tax debt directly from a bank, building society or ISA account without a court order. The programme was paused for several years and restarted in 2025, so hold notices are appearing again. The safeguards are real (a £5,000 floor, a face-to-face visit, a 30-day objection window and a County Court appeal), but they operate after the money has been frozen.

What Direct Recovery of Debts Is

Direct Recovery of Debts, universally abbreviated to DRD, is HMRC’s power to take money owed to it directly from a taxpayer’s bank, building society or ISA account without first obtaining a court order. It was introduced by section 51 of and Schedule 8 to the Finance (No.2) Act 2015 and came into force on 18 November 2015.

The power was used sparingly, then paused entirely for a period. HMRC restarted the DRD programme in 2025, which is why advisers are seeing hold notices again after several quiet years. Anyone with an established HMRC debt and a bank balance should now treat DRD as a live risk rather than a theoretical one.

When HMRC Can Use It

DRD is available only where all of the following apply:

• The debt is “established”: that is, it is no longer capable of being appealed, or any appeal has been determined. HMRC cannot use DRD to collect a sum that is genuinely under appeal.
• The total owed is at least £1,000. This covers tax, tax credit overpayments and accelerated payments.
• The taxpayer has been given the opportunity to pay and has not done so, and has not engaged with HMRC.

The two headline safeguards

• The £5,000 floor. HMRC must leave a minimum aggregate of £5,000 across all of the debtor’s accounts. It is not per account; it is the total that must remain available.
• The face-to-face visit. HMRC policy requires a visit to every debtor before they can be considered for DRD, in order to confirm identity, discuss their circumstances and check for vulnerability. Where hardship or vulnerability is identified, DRD should not proceed. This is a safeguard advisers should test: if no visit took place, or the visiting officer was not told of relevant circumstances, that is a substantial point.

The Process and the Deadlines

1. Information notice to the bank. HMRC first obtains details of the accounts held and the balances.
2. Hold notice. HMRC serves a hold notice on the deposit-taker, which freezes the relevant amount. The bank must act on it.
3. Notification to the account holder. The taxpayer, and anyone else with an interest in the account, is notified.
4. 30 days to object to HMRC. This is the critical window. Objections may be made by the taxpayer and by any other person with an interest in the account, including a joint account holder.
5. HMRC determines the objection and notifies its decision.
6. Appeal to the County Court. If the objection is refused, there is a right of appeal to the County Court on specified grounds.
7. Deduction notice. Only after that process is exhausted is the money actually paid over to HMRC.

Grounds of objection

• Exceptional hardship: that the hold will cause exceptional hardship even after the £5,000 floor is taken into account. Mortgage or rent payments, essential business payroll, medical costs and care costs are the usual examples, and they need evidence, not assertion.
• The debt is not established, for example an appeal is live, a late appeal has been admitted, or the assessment was superseded.
• The amount is wrong: payments not credited, a Time to Pay arrangement in place, or a set-off or repayment due in another head of tax.
• The money is not the debtor’s: the most common ground on joint and business accounts. HMRC works from a presumed proportionate share, which can be rebutted with evidence of the actual beneficial ownership.
• Identity or account errors.

The Rest of HMRC’s Enforcement Toolkit

DRD attracts attention because it is unusual, but it is one of a range of powers and rarely the first one used. Understanding the whole toolkit tells you how much time you actually have.

How to Stop It Before It Starts

DRD is aimed at taxpayers who can pay and will not, and who have not engaged. Engagement is therefore the most effective defence.

• Time to Pay. A properly agreed instalment arrangement takes the debt out of the enforcement pipeline. HMRC will want to understand income, assets and the reason for the arrears, and will expect current liabilities to be kept up to date as well.
• Check the debt is actually established. Very often it is not: an assessment may be appealable, an appeal may have been overlooked, or tax may be capable of postponement under s55 TMA 1970. See our guide to the statutory review and appeals ladder.
• Reconcile the account. HMRC debt figures frequently include estimated determinations, penalties that were never notified properly, or payments allocated to the wrong period. Ask for a full statement of account for each head of tax.
• Raise vulnerability early. Ill health, disability, mental health difficulties, bereavement and caring responsibilities all engage HMRC’s support arrangements and its DRD policy on vulnerability. Say so in writing.
• Do not ignore the visit. The face-to-face visit is the point at which circumstances are recorded. A taxpayer who avoids it loses the best opportunity to prevent the process going further.

If a Hold Notice Has Already Been Served

1. Diarise the 30-day objection deadline immediately. It is the only deadline that matters at this stage.
2. Object in writing on every available ground, not just hardship. Grounds can be run in the alternative.
3. Evidence the hardship with bank statements, standing orders, mortgage or tenancy documents, payroll runs and any medical or care evidence.
4. Get any non-debtor joint holder to object separately, in their own name, with evidence of the source of the funds.
5. Test whether the debt is established. If an appeal is live or can be admitted late, DRD should not be available at all.
6. Open a parallel Time to Pay negotiation. A workable proposal frequently resolves the objection without the need for a County Court appeal.
7. Preserve the County Court route. If the objection is refused, there is a right of appeal on specified grounds, and the deadline is short.

Frequently Asked Questions