Direct recovery of debt

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While every attempt will be made to ensure that information provided is accurate at the time of publication, it should be treated as guidance only and does not constitute legal or professional advice. Tax law and guidance changes frequently and readers are advised to consult the current relevant publication for the most up-to-date information on this topic.

 

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From the date of Royal Assent to Finance (No 2) Bill 2015, HMRC will have the power to instruct banks and building societies to deduct amounts to settle a person’s tax debts directly from their accounts.

Tolley®Guidance has produced a guidance note on direct recovery of debt which provides details of how the process will work, including how the taxpayer can make an objection to HMRC.

 

Summary

Produced by Tolley

The proposal for HMRC to have the ability to instruct banks and building societies to deduct amounts to settle taxpayers' tax debts directly from their bank accounts caused controversy when it was announced in Budget 2014.

The consultation on direct recovery of debts (DRD) was published in May 2014. For details of some of the issues raised at the time, see ‘A power too far’ by Mike Truman in Taxation Magazine on 6 August 2014.

The Government listened to the objections but was determined to push ahead with the policy. The summary of responses, published in November 2014, promised significantly strengthened the taxpayer safeguards. For commentary on these safeguards, see ‘Power drain’ by Mike Truman in Taxation Magazine on 26 November 2014. The draft legislation was published in December 2014, although it was subsequently not included in ‘Still saying no?’ by Mike Truman in Taxation Magazine on 14 January 2015.

Instead DRD is to be legislated in Finance (No 2) Bill 2015 and is to come into effect from the date of Royal Assent. This guidance note discusses the provisions as published on 15 July 2015 as they will apply to individuals.

Whilst Finance (No 2) Bill 2015 renames the provisions as 'enforcement by deduction from accounts', this guidance refers to the provisions as 'DRD' as this is the term with which advisers are familiar.

Broadly, the DRD process (discussed in detail below, along with the meaning of the important terms) can be summarised as follows:

  • 1. the taxpayer owes tax debts totalling £1,000 or more, which HMRC has been chasing by post and by telephone
  • 2. HMRC visits the taxpayer to confirm that the debt (the 'relevant sum') is due and to check whether the taxpayer is 'vulnerable' (no vulnerable taxpayer will have tax debt collected via DRD)
  • 3. HMRC issues an information notice to a 'deposit-taker', which requires the deposit-taker to provide details to HMRC of all accounts held by the taxpayer
  • 4. HMRC issues a ‘hold notice’ to the deposit-taker which requires the deposit-taker to (i) either freeze funds up to the amount of the 'relevant sum' or transfer the relevant sum into a suspense account, and (ii) notify HMRC of the ‘held amounts’
  • 5. HMRC must, and the deposit-taker may, then provide full details to the taxpayer and any affected third party, of the held amounts in relation to his accounts
  • 6. the taxpayer and any affected third party then has 30 calendar days to make objections to the hold notice
  • 7. if an objection is made, HMRC has 30 working days to consider the objection, which will either be dismissed or the hold notice will be wholly or partly cancelled
  • 8. if the objection is dismissed or not fully upheld the taxpayer can appeal HMRC's decision, taking it to the County Court (rather than the Tribunal)
  • 9. once the appeal route is exhausted, if the hold notice stands HMRC issues a deduction notice to the deposit-taker authorising it to pay over the amount in the hold notice in satisfaction of the taxpayer's tax debt

A 'deposit-taker' is a person who may lawfully accept deposits in the UK in the course of a business, which is a regulated activity under FSMA 2000, s 22 and Sch 2. This covers all UK banks and building societies and any overseas banks which are authorised as ‘deposit takers’ by the Financial Conduct Authority.

Finance (No 2) Bill 2015, Sch 8, para 22

The DRD rules only apply to England, Wales and Northern Ireland. Taxpayers in Scotland are not affected by DRD as similar provisions already exist in Scotland (see below). However Scottish banks are ‘deposit-takers’ so it is not possible for a taxpayer living in England to avoid DRD by moving his funds to a Scottish bank.

Finance (No 2) Bill 2015, Sch 8, para 23

If at any point in the process the taxpayer pays off all or part of the tax debt, the amount held and / or deducted from the account will be reduced accordingly.

Relevant Sum

HMRC will only collect tax debts which can be classified as a 'relevant sum' under the legislation. To be a 'relevant sum' all three conditions must be met:

  • a) the tax debt outstanding is £1,000 or more
  • b) it is an 'established debt' (see below) or it is due under the accelerated payment rules (see the Accelerated payment notices guidance note), and
  • c) HMRC is satisfied that the taxpayer is aware that the amount is due (see below)

Finance (No 2) Bill 2015, Sch 8, para 2(2)-(4)

An 'established debt' is one that is due to HMRC under the law, either because it has not been paid by the due date or has arisen under a binding contract settlement and there is ‘no possibility’ that the amount due will be overturned on appeal – whether because there is no right of appeal, the time limit to make an appeal has passed or an appeal was brought but has been withdrawn. The statute specifically provides that there is ‘no possibility’ of an appeal where a person can make a late appeal under the court or Tribunal rules.

Finance (No 2) Bill 2015, Sch 8, para 2(1), (5)-(6)

Any type of established debt can be collected in this manner. It therefore includes all types of taxes, including indirect taxes such as VAT, national insurance contributions and tax credits. However, debts owed to HMRC in another capacity – such as under an ordinary commercial contract – are not covered. The simplest sort of ‘outstanding debt’ is a tax liability which has not been paid by the due date which the taxpayer accepts is correct.

When deciding whether the amount outstanding is £1,000 or more, all the tax debts owed by that person will be added together.

It is not only individuals who are affected by the DRD rules, all types of taxpayers could have tax debts collected via this method: companies, trustees, personal representatives, etc.

Face-to-face meeting

Although the statute merely provides that HMRC must be “satisfied that the taxpayer is aware that the amount is due", HMRC has said that every debtor will receive a face-to-face visit so that the taxpayer can be personally identified and the debt confirmed. However, because there is no statutory requirement for a face-to-face meeting, there remains a risk that this practice could be withdrawn or changed at any point.

HMRC guidance, Chapter 4; Finance (No 2) Bill 2015 Explanatory Notes, Sch 8, para 2

At the face-to-face meeting, the Officer will discuss payment options with the taxpayer, including time to pay. See the Time to pay arrangements guidance note.

HMRC guidance, Chapter 4

 

At the time of writing, a number of practical details are unclear:

 

  • what steps HMRC will take to arrange the meeting, for example, whether it will it be notified in advance by telephone or letter
  • the action HMRC will take if the taxpayer is out when the Officer visits, keeps cancelling the meetings, or he simply refuses to agree a meeting time. In these situations, it is unlikely that HMRC will accept that DRD can be avoided indefinitel
  • whether the taxpayer will be required to sign some paperwork to confirm the meeting has taken place and / or whether HMRC will send notes of the meeting to the taxpayer afterwards
  • whether the taxpayer will be expected to produce any records during the visit, for example to support his position if he disputes the amount due or needs time to pay
  • where the debtor is an individual, trustee or a personal representative who is employed, whether HMRC will visit the employer's place of business

The face-to-face meeting is key to identifying whether the taxpayer is a 'vulnerable' person. HMRC has promised that vulnerable taxpayers will not have their debts collected by DRD. Instead they will be given extra support by a specialist debt team who may also refer them to charities such as Tax Aid or Tax Help for Older People for advice.

Finance (No 2) Bill 2015 Explanatory Notes, Sch 8, para 4

Again, because there is no reference in the statute to this extra protection for vulnerable persons, certain professional bodies are continuing to press for these safeguards to be made statutory.

CIOT press release, 15 July 2015

 

The face-to-face meeting is also part of the procedure to establish whether there is a 'relevant sum' (ie to meet condition C listed above). Therefore the face-to-face meeting must take place before HMRC requests information on the account balances from the deposit-taker. When the Officer visits the taxpayer he will not know whether the taxpayer has sufficient funds to enable the debt to be recovered under the DRD rules.

The face-to-face meeting is therefore a welcome addition to the debt management process as it allows taxpayers to discuss their debts and payment problems with HMRC, perhaps putting an end to the payment demands and warnings of more drastic collection proceeds which cause such worry to taxpayers. It may also mean that where HMRC's information is incorrect, and in fact no money is owed, this can also be dealt with during the face-to-face visit.

HMRC issues an information notice to the deposit-taker

Once it has been established that the taxpayer owes a 'relevant sum' (ie conditions A to C above are met), HMRC can issue an information notice to require the deposit-takers to provide details of the amounts within the bank accounts owned by that taxpayer.

Finance (No 2) Bill 2015, Sch 8, paras 3, 22

Deposit-takers are required by annual data-gathering notices to report details of interest earned by UK residents, which includes the sort codes / account numbers and personal details of the payees (name, address, national insurance number, date of birth). Therefore HMRC's computer systems will have details of taxpayers' current and historic accounts, although no details of the account balances or details of ISAs are currently provided. This will provide HMRC with enough facts to issue the information notice to the right deposit-taker.

FA 2011, Sch 23; HMRC guidance on bank and building society interest (BBSI) returns, para 4.3

Once the deposit-taker has been 'given' the information notice, it has 10 working days to provide the required details to HMRC. This includes full details of all accounts held by the taxpayer (irrespective of whether the interest arising is taxable) including accounts which are held by the taxpayer for the benefit of another person (eg a minor child, a pension scheme, a discretionary trust or as a personal representative). If the deposit-taker has sufficient information to be able to tell that the account is held for the benefit of another person it is good practice to note this in the response to HMRC, as this information will be used to inform the instructions in the hold notice (see below). The statute specifically requires that details of any other person who holds an account jointly with the taxpayer be provided.

Finance (No 2) Bill 2015, Sch 8, para 3(2), (4)

'Given' means the date the notice was received by the deposit-taker providing that it can evidence the date of receipt. See the Accelerated payment notices guidance note for more on the meaning of ‘given’.

IA 1978, s 7

HMRC can only issue an information notice for the purpose of the DRD provisions. For example, information notices cannot be used to obtain details for the purposes of an enquiry, or as a fishing expedition to see who has undisclosed interest or large deposits. This limitation has been seen as a protection for taxpayers, but given the amount of information which has to be provided in response to annual data-gathering notices, it is unlikely to make any significant difference. In other words, HMRC already have access to so much information about bank accounts which they can use to cross-match against taxpayer’s returns.

Finance (No 2) Bill 2015, Sch 8, para 3(3); FA 2011, Sch 23

Although no details are available at the time of writing, it is assumed that HMRC will send information notices to all deposit-takers with which HMRC is aware that the taxpayer holds accounts or has held bank accounts in the past. This will then give HMRC the fullest possible picture as to the taxpayer's cash deposits and the Officer can decide which deposit-taker(s) should receive a hold notice.

HMRC issues a hold notice to the deposit-taker

Once HMRC has full details of the taxpayer's accounts from the deposit-taker(s), and assuming the tax debt is still outstanding at this point, HMRC can issue a hold notice to the deposit-taker(s).

Finance (No 2) Bill 2015, Sch 8, para 4(1)

The hold notice must contain the particulars listed in Finance (No 2) Bill 2015, Sch 8, para 4(2), including the taxpayer's name, last known address, the 'specified amount' to be held and the 'safeguarded amount'. It may also include other information, such as account(s) held by the taxpayer which the deposit-taker should disregard when applying the hold notice. It is not clear which types of accounts HMRC might ask to be disregarded, although it is likely to include those which are held in the taxpayer's name for the benefit of others (eg a minor child etc), if HMRC is aware of it, as mentioned above.

HMRC can issue a number of hold notices to different deposit-takers in respect of the same debt, but the total amounts specified in all the hold notices must not exceed the amount of the total tax debt. In other words, HMRC cannot hold the same debt several times over with different deposit-takers.

Finance (No 2) Bill 2015, Sch 8, para 4(4)

The ‘safeguarded amount’ is the amount of the taxpayer's funds which must remain available to the taxpayer after the hold notice has been applied. HMRC has promised that this will usually be at least £5,000, which is sufficient to ensure that taxpayers are able to meet immediately necessary expenses, such as mortgage payments. There is a statutory exception which allows HMRC to reduce the safeguarded amount to less than £5,000 if the taxpayer has funds in accounts denominated in a foreign currency, which when valued in sterling mean that the amount safeguarded in respect of sterling accounts can be reduced. This is because the held amount cannot be in respect of a non-sterling account.

Finance (No 2) Bill 2015, Sch 8, paras 4(6), (8), (9), 5(6)(b)

HMRC also has discretion to set the safeguarded amount at a higher level if necessary, such as if staff salary payments need to be paid. It is sensible for the taxpayer to inform the HMRC Officer at the face-to-face meeting of any such requirement for a higher safeguarded amount.

Finance (No 2) Bill 2015 Explanatory Notes, Sch 8, para 9

On receipt of the hold notice, the actions the deposit-taker must take are as follows:

Finance (No 2) Bill 2015, Sch 8, paras 5(1)-(3), 7(1)-(5), (10)

The deposit-taker must continue to maintain the action in Step iii until the hold notice is cancelled or HMRC sends a deduction notice in relation to the hold notice (see below). If the notice is wholly or partly cancelled, the deposit-taker has five working days to release the held amount, or part of the held amount, as appropriate.

Finance (No 2) Bill 2015, Sch 8, paras 5(4), (5), 8, 10(6)

Where the taxpayer has only one account with the deposit-taker, the 'held amount' (Step ii above) is the lower of:

  • the balance in the account less the safeguarded amount (which may be nil if the balance is less than the safeguarded amount)
  • the amount specified in the hold notice

Finance (No 2) Bill 2015, Sch 8, para 6

Where the taxpayer has more than one account, the deposit-taker must determine the 'held amount' in relation to each account (Step ii above) by:

  • 1. compiling a list of all the account balances. For joint accounts this will be the taxpayer's share, based on a simple division of the account balance equally between all holders rather than taking into consideration the underlying beneficial ownership
  • 2. add together the balances of all the accounts from Step 1. If the total is equal to or less than the 'safeguarded amount', the held amount is nil. If the total is more than the safeguarded amount move on to Step 3
  • 3. match the safeguarded amount to the accounts, safeguarding the amounts in any joint accounts first and following any guidelines as to priority, as specified by HMRC in the hold notice
  • 4. match the amount specified in the hold notice to the remaining accounts, exhausting the funds in each account before moving the next one. Accounts where the taxpayer is the sole owner are matched first but the deposit-taker may have some discretion as to the order and so may decide to prioritise placing a hold on money in savings accounts over that in current accounts, for example

Finance (No 2) Bill 2015, Sch 8, para 6; Sch 8, para 13-16

See Example 1.

Note that the account balances in Step 1 are the 'available amounts', ie the amount standing in credit. It does not include the amount of any agreed overdraft, which may be available to the taxpayer to spend.

Finance (No 2) Bill 2015, Sch 8, para 6(3)

Once HMRC receives the notice from the deposit-taker stating that funds have been held (see Step iv above) it must send to the taxpayer:

  • a copy of the hold notice(s) which HMRC sent to the deposit-taker(s)
  • a notice specifying the tax debt to which the hold notice relates, the balances in the taxpayer's accounts and the amount held (or in a suspense account) in relation to each account

Finance (No 2) Bill 2015, Sch 8, para 7(6)-(8)

HMRC must also notify in writing:

  • any person who holds an account jointly with the taxpayer where there is a hold on any of the balance of that account (or any of the balance which has been transferred into a suspense account)
  • any person who has a beneficial interest in the account where any amount of the balance has been held (or transferred into a suspense account)

Finance (No 2) Bill 2015, Sch 8, para 7(6), (9), (11)

Options for the taxpayer

On receipt of the notice from HMRC, the taxpayer has 30 calendar days to:

  • make a formal objection to the hold notice in writing to HMRC, or
  • pay the tax debt (if no objection is raised, it is likely that HMRC will issue a deduction notice to the deposit-taker, see below)

Finance (No 2) Bill 2015, Sch 8, para 9(1)-(5)

Options for a joint account holder or beneficial owner

On receipt of the notice from HMRC, any other owner of the funds in the account, be that a joint account holder or the beneficial owner of the funds, can make a written objection to the hold notice. Again the objection must be made within 30 calendar days of the receipt of the notice from HMRC.

Finance (No 2) Bill 2015, Sch 8, para 9(1)-(5)

Making objections

It is only possible to make an objection to the hold notice on one or more of the following grounds and this must be stated in the objection:

  • that the 'relevant sum' (ie the tax debt, see above) specified in the hold notice has been wholly or partly paid to HMRC
  • that when the deposit-taker received the hold notice either: (i) there was no 'relevant sum' owed by the taxpayer, or (ii) the taxpayer had no account with the deposit-taker
  • that the hold notice is causing or will cause hardship to the taxpayer or another person
  • that the account is held for the benefit of another person

Finance (No 2) Bill 2015, Sch 8, para 9(3), (4)

It is only the taxpayer who can make an objection on the grounds that the relevant sum has been wholly or partly paid. The joint account holder or beneficial owner of the funds cannot object on these grounds.

Finance (No 2) Bill 2015, Sch 8, para 9(2), (3)

It is possible to make a late objection (ie after 30 days have passed), although it may be that HMRC has already instructed the deposit-taker to pay over the funds at that point. The legislation states that to make a late objection, the taxpayer must ask HMRC to agree to the late objection and have a reasonable excuse for not making the objection in good time. The taxpayer must also make the objection without 'unreasonable delay' once the reasonable excuse has ended. For a discussion of the general principles of reasonable excuse, see the Reasonable excuse guidance note.

Finance (No 2) Bill 2015, Sch 8, para 9(6), (7)

HMRC has 30 working days to consider any objections, which will be via an internal review process. Following the review, HMRC will notify the taxpayer / other person that either the objections will be dismissed or the hold notice will be wholly or partly cancelled (which will take account of reductions in the specified amount in the hold notice etc). If the hold notice is wholly or partly cancelled, HMRC must send a copy of this notice to the taxpayer as well as sending it to the deposit-taker.

Finance (No 2) Bill 2015, Sch 8, para 10(1); Summary of responses, para 2.29

Appeal against the dismissal of the objections

If HMRC dismisses the objections, the person who made the objections (ie the taxpayer, joint account holder or beneficial owner of the funds) has 30 days from the date of receipt of the formal dismissal to appeal to the County Court. See Simon's Taxes A1.702.

Finance (No 2) Bill 2015, Sch 8, para 11; HMRC guidance, Chapter 4

This is the right of appeal against the collection via DRD, it is not the way in which the amount of the tax debt is disputed. If the taxpayer wishes to challenge the amount due, he should follow the usual processes to appeal the assessment. See the Appealing an HMRC decision - outline and Judicial review in tax cases guidance notes.

HMRC issues a deduction notice to the deposit-taker

If the taxpayer fails to pay the tax debt following receipt of the copy of the hold notice, HMRC will issue a deduction notice to the deposit-taker to pay over the held amount to HMRC. A copy of the notice is also sent to the taxpayer and the joint account holder and the beneficial owner of the funds as appropriate.

Finance (No 2) Bill 2015, Sch 8, para 12(2), Sch 8, para 12(1), (8), (9)

The deduction notice must contain the name of the taxpayer and specify the relevant account(s) from which the deduction should be taken. HMRC will use the information sent by the deposit-taker in response to the hold notice to determine the accounts from which payment should be made. The deduction notice also contains the deadline for making the transfer of funds to HMRC and, presumably, it will contain information on how to make the payment (HMRC's account details, the taxpayer reference number etc).

Finance (No 2) Bill 2015, Sch 8, para 12(2), Sch 8, para 12(2)

HMRC cannot ask the deposit-taker to pay over more than the taxpayer owes. Therefore if the taxpayer has paid off some of the tax debt following notification that a hold has been placed on his funds then HMRC will partly cancel the hold notice and this will be reflected in the amount requested in the later deduction notice.

Finance (No 2) Bill 2015, Sch 8, para 12(7)

The earliest that the deduction notice can be issued is after the expiry of 30 calendar days from the date the taxpayer has been notified by HMRC that there is a hold on his funds. If a formal objection is made there will be a further delay whilst HMRC considers the objection. Once HMRC responds to the objection there is another period of 30 days, at the end of which the time limit for appealing to the County Court will have expired. If the taxpayer appeals then the deduction notice cannot be issued until the matter has been finally determined by the courts.

Finance (No 2) Bill 2015, Sch 8, para 12(5)

HMRC is able to amend or cancel the deduction notice as necessary (for example if the taxpayer has already paid the full amount owed).

Finance (No 2) Bill 2015, Sch 8, para 12(10)

 

Penalties for the deposit-taker

The deposit-taker will be liable to penalties if:

  • it fails to comply with an information notice, a hold notice or a deduction notice
  • it fails to report the details to HMRC which are required by Finance (No 2) Bill 2015, Sch 8, para 7(3), (5) in response to the hold notice (ie details of the accounts held by the taxpayer (and if there are no such accounts, confirmation to HMRC that this is the case), the 'held amount' in relation to each account, details of any joint account holders and / or beneficial owners of the funds)
  • it fails to release or modify the 'held amounts' in response to the cancellation or part cancellation of the hold notice
  • following receipt of an information notice or a hold notice, it in any way prejudices HMRC's ability to use these direct recovery positions (by, for example, tipping-off the taxpayer to move the funds when it receives the information notice)

Finance (No 2) Bill 2015, Sch 8, para 13(1)

The above bullet points may cover a range of situations. For example, failure to comply with a hold notice could include:

  • not applying the hold to the funds within the deadline
  • not providing HMRC with the information required within the deadline, or
  • providing incorrect or incomplete information to HMRC

However, the penalty provisions state that a penalty may not be charged on the deposit-taker for failure to meet a deadline if HMRC has given an extension. Therefore, although discretion to extend the deadlines is not given in the provisions covering the notices, if the deposit-taker estimates it is unlikely to be able to comply with the notice within the allotted time, it should contact HMRC as soon as possible to see if an extension can be granted.

Finance (No 2) Bill 2015, Sch 8, para 13(5)

The penalties applied are the same no matter the cause of the failure, namely:

  • an initial penalty of £300
  • up to £60 daily penalty if the failure continues after the deposit-taker has received the initial penalty notice

Finance (No 2) Bill 2015, Sch 8, paras 13(3), (4), 14(1)

The deposit-taker has 30 days to appeal against the penalty notice if it believes the penalty is not due or if it has a reasonable excuse for the failure. Reliance on another person is not a reasonable excuse unless the deposit-taker took reasonable care to avoid the failure. Once a reasonable excuse has ceased, the deposit-taker must remedy the failure without undue delay.

Finance (No 2) Bill 2015, Sch 8, paras 13(6), (7), 15

If the penalty is found to be due, the deposit-taker has 30 days to pay the penalty. Interest will be charged if the penalty is paid late.

Finance (No 2) Bill 2015, Sch 8, para 16; FA 2009, s 101

What if it is found that the relevant sum is not due?

The legislation prevents a person from suing the deposit-taker for any damages due in respect of any action taken by the deposit-taker in good faith in order to comply with the DRD rules. The taxpayer therefore cannot seek redress from the deposit-taker for the adverse financial consequences suffered where the deposit-taker has held or paid over funds to HMRC in respect of a debt which is not due. For example, a person cannot claim against the deposit-taker on the basis that freezing his funds had led to a house purchase falling through, the loss of key staff through not being able to pay wages, or losing business from being unable to honour financial commitments.

Finance (No 2) Bill 2015, Sch 8, para 17

For more on the concerns of the deposit-takers about potential legal challenges, see the summary of responses, paragraphs 2.55 to 2.58.

Most, if not all, advisers will have experience of HMRC chasing taxpayers for debts which are not in fact due. This was one of the main objections raised by agents in response to the original consultation. Hopefully the face-to-face meeting together with the taxpayer’s right to object mean that any such erroneous DRD action will be rare. Nevertheless, if mistakes are made, it will be possible to make a complaint and claim financial compensation. See the HMRC complaints process guidance note.

Summary of responses, para 2.40

Scotland

The DRD rules only apply in England, Wales and Northern Ireland. This is because HMRC already has the right to recover debts in a similar manner in Scotland under the summary warrant procedure. For details of the summary warrant procedure, see RSTP5004.

Finance (No 2) Bill 2015, Sch 8, para 23; FA 2008, s 128; Summary of responses, paras 2.59-2.60

How will HMRC use direct recovery of debt?

At the time of writing it is not clear where DRD will sit within HMRC's existing debt management processes.

Although direct recovery of debt requires a face-to-face visit, it may be cheaper to administer than the existing collection options (such as using third party debt collection agencies or applying to the courts to seize goods via distraint). Therefore, it is likely that DRD will be used within 12 months of the debt becoming due, if the standard payment demands and calls chasing the debt fail to collect the amount due.

However this does not mean that all HMRC's other debt collection procedures will become obsolete. For example, the seizing of goods by distraint may still be appropriate if the taxpayer has insufficient savings to pay off the debt or has savings of less than the safeguarded amount of £5,000.

All DRD cases will be handled by a specialist team within the HMRC Debt Management Unit (DMU) and there will be a dedicated helpline to allow direct access to this team. A new team will also be set up to deal with debts owed by vulnerable people.

Summary of responses, paras 1.5, 1.8, 2.23

It is expected that HMRC will apply the direct recovery of debt to a small number of taxpayers in the remaining part of the 2015/16 tax year following Royal Assent. This will allow HMRC to gain experience of how the process works in practice and refine its processes as necessary.

Summary of responses, para 1.5

The Government has committed to a full review of DRD (including the HMRC processes) once the provisions have been operational for two years, which should be in the autumn of 2018. There is also a pledge to work closely with the Compliance Reform Forum and the Joint Initiative Steering Group to seek feedback on the experience of taxpayers and tax advisers in DRD cases.

Summary of responses, paras 2.33-2.34

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