Can HMRC Take Money From Your Bank Account?

Can HMRC take money from your bank account? The answer is, yes, HMRC can take money from your bank account by virtue of Section 51 of the Finance (No.2) Act 2015. This is known as Direct Recovery of Debt (DRD).

Use By HMRC Of Direct Recovery Of Debt

HMRC Use Between 2021 And 2024

In response to a request made under Section 1 of the Freedom of Information Act 2000, HMRC provided its response to the following information sought:

This is a request for the last four calendar years of the number of times per year that HMRC has extracted funds from a person’s deposit account under Schedule 8 of the Finance (No. 2) Act 2015.

HMRC’s response dated 22 July 2025 was as follows:

HMRC has not used its Direct Recovery of Debt (DRD) powers to collect liabilities from debtors over the last four calendar years (2021 to 2024). DRD powers, which enable HMRC to recover established tax debts directly from customers’ bank accounts, were paused during the COVID-19 pandemic. This decision formed part of a wider effort to reduce financial pressure on individuals and businesses during a period of significant economic disruption.

The government announced at Spring Statement 2025 that HMRC will restart “director recovery” of tax debts owed by individuals and companies who have the ability to pay but choose not to do so.

The Spring Statement, also said:

The government will also explore options to automate the process for collecting lower value tax debts.

HMRC Use Between 2017 And 2021

HMRC’s response under the FOI dated 4 August 2025 revealed how few the number of instances HMRC has used this power:

• 2017-2018 – 7 times
• 2018-2019 – 4 times
• 2019-2020 – 11 times
• 2020-2021 – 0 times

When Can HMRC Take Money From Your Account?

Whilst it might appear a rather draconian power available to HMRC to be able to take money from a person’s bank account in respect of tax paid, the provisions set out in Schedule 8 of the Finance (No.2) Act 2015 are not without safeguards.

The starting point is that the amount involved must be equal to or more than £1,000.

Furthermore, HMRC is not permitted to make use of this power of enforcement to take money from a person’s bank account unless it is satisfied that the person owing the tax to HMRC is aware of the position that it is money due.

Furthermore, it is a requirement that no part of the sum of money claimed by HMRC could be subject to any appeal by the taxpayer. In other words, there is a debt, so the matter is about the collection of the money, not a dispute over whether a debt is due to HMRC.

The Procedure

Before making use of this power, it is likely that HMRC will need information about deposit accounts in the name of the relevant person and it can accordingly therefore issue to a relevant financial institution that accepts taxpayers’ deposit monies and Information Notice seeking information on the accounts held by the relevant person, including but not limited to joint accounts.

Hold Notice

HMRC, if they determine that there is an amount in a deposit account that should be available to pay taxes owed by a taxpayer, can serve a hold notice on the financial institution.

This in effect freezes the deposit account to stop the level of the account falling below the amount needed to satisfy the HMRC debt.

Deduction Notice

Subject to the right to appeal an objection, HMRC can issue a deduction notice to the relevant financial institution holding the deposit for the purposes of extracting the relevant amounts sought referred to in the hold notice.

Safeguards

As the taxpayer is not without safeguards in relation to this matter, they can levy an objection within a prescribed time period to HMRC, setting out the basis of their objection.

In addition, there is an appeal process that the taxpayer can make use of.

Objection To Hold Notice

The taxpayer can object to the hold notice within 30 days.

The only basis of objection that matters is:

1. The debt to which the hold notice relates has been paid or partly paid.
2. The hold notice is causing exceptional hardship to the person making the objection or another person.
3. There is an interested third party in relation to one or more of the affected accounts.

HMRC must then issue its decision in response within 30 days.

Appeal After Objections Rejected

If the taxpayer’s objections are rejected by HMRC, they can then appeal within 30 days to the County Court.