HMRC alert as money could be taken directly from your bank account | Personal Finance | Finance
A HMRC (His Majesty’s Revenue and Customs) warning has been issued as funds could be withdrawn directly from your bank account, following a major announcement for state pensioners. A regulation has been reintroduced, which was suspended by HMRC during the coronavirus pandemic, allowing money to be removed from your personal account.
Whilst not all individuals will be affected by this alteration, there are crucial details you should understand, particularly regarding tax payments. Guidance was recently provided by Kevin White, who shares useful financial advice online via the TikTok account magicmoneytips. In a recent clip, he encouraged viewers to be aware of the developments, in case they notice any funds “vanish.” This follows warnings to some UK households that they could face substantial HMRC bills.
Kevin explained: “Did you know that HMRC can now reclaim any overdue tax bills directly from your bank account? Using powers that were turned off during Covid, they’ve recently turned them back on.
“So that means, if you owe tax of over £1,000, they can come to you directly and take it out of your bank account; however, there are some conditions before they can do it.
“Firstly, you have to have ignored tax reminders so, if you’ve ignored that tax, then they can come and then they’ll have to knock on your door and prove who you are. Before they’ve done those two things, they can’t take any money out of your bank account.”
Kevin highlighted that for money to be seized, one must owe over £1,000, and this amount must also be outstanding. He added that ignoring tax reminders is another prerequisite for money to be taken.
He emphasised the importance of everyone getting their tax affairs in order. While they are not doing it automatically, he believes it could serve as a wake-up call for individuals to get their financial affairs in good shape.
What should you be aware of?
HMRC has the authority to directly withdraw money from your bank account, but only under very specific conditions. This power comes from a scheme known as Direct Recovery of Debts (DRD).
The DRD is designed to aid HMRC in recovering tax debts from those who owe at least £1,000. These individuals will have also disregarded several attempts to make contact and have no valid appeals pending.
While this may seem alarming to some, the frequency with which it’s been used suggests it happens quite infrequently. The DRD scheme was first introduced in 2016 and, at the time, HMRC estimated it would be implemented around 11,000 times a year.
However, during its active years up to 2018, it was only actually utilised 19 times. Before taking any action, HMRC is obliged to conduct a face-to-face visit to ensure they have the correct individual, and they can assess for vulnerabilities and discuss other potential payment options.
If DRD is approved, HMRC is obliged to leave a minimum of £5,000 untouched across all the debtor’s accounts. This means that if a person has £7,500 in savings, they couldn’t remove more than £2,500.
Additionally, a formal 30-day notice must be issued before any money is taken. This provides the account holder with time to appeal, correct any errors or to develop a suitable payment plan.
The HMRC website states: “The vast majority of taxpayers pay their taxes in full and on time, but a minority choose not to pay, even though they have the means to do so. Some people require an additional prompt or reminder to pay what they owe, and a significant number of people pay once they are contacted.
“Direct Recovery of Debts (DRD) is used when an individual or business can afford to pay what they owe but are choosing not to. These powers are an effective incentive to pay and were used only 19 times in two years, before pausing during the Covid-19 pandemic.”
