The return of HMRC’s Direct Recovery of Debt powers

With the Self-Assessment deadline approaching, we thought now would be a good time to highlight something that could catch many people off guard this year: the return of HMRC’s Direct Recovery of Debt (DRD) powers, a programme that allows them to recover unpaid tax directly from your bank account.


What is Direct Recovery of Debt?


The Direct Recovery of Debt scheme gives HMRC the power to recover unpaid tax debts of £1,000 or more directly from bank and building society accounts, including cash ISAs.


This is not new. The scheme was first introduced in 2015 but paused during the pandemic. It has now been reinstated, with HMRC confirming that debt recovery activity will be stepped up in the months ahead.


The aim is to target those who have ignored repeated requests to engage or settle their tax bills. HMRC has stated that DRD will only be used when:


  • The debt is established, and appeal deadlines have passed

  • The taxpayer has ignored multiple attempts by HMRC to make contact

  • There are enough funds to pay the debt and still leave at least £5,000 across all accounts

  • The taxpayer has been visited in person by HMRC before any recovery takes place


Although there are safeguards, this remains one of HMRC’s strongest enforcement powers. Its reintroduction signals a clear message that debt collection efforts are intensifying.


Why this matters now


The 31 January Self-Assessment deadline is approaching. For restaurant and café owners, this period can be particularly challenging with post-Christmas cash flow and seasonal fluctuations. But if you have fallen behind on filing or payment, this year brings additional urgency.

Once a debt becomes established, meaning it is due and not under appeal, you could be on HMRC’s radar for DRD. Even if you believe there has been an error, ignoring letters or demands can make things worse.


The key message is simple: do not let silence turn a small problem into a serious one. Engage early, clarify your position, and seek help if you need it.


What to do if you are struggling to pay


If you are facing financial pressure, there are options available. HMRC operates a Time to Pay scheme that allows individuals and businesses to spread tax liabilities over several months in manageable instalments.


The key is communication. If you can show that you are willing to pay and can afford a repayment plan, HMRC is usually open to negotiation.

We can also play an important role here. We can:


  • Review your cash flow and assess whether a repayment plan is appropriate

  • Communicate directly with HMRC on your behalf

  • Help you prepare the information HMRC needs to agree realistic terms

  • Keep your records accurate to prevent disputes or delays


Acting early gives you more control and avoids the stress of HMRC enforcement.


By way of reassurance, HMRC uses Direct Recovery of Debt only as a last resort. It applies to taxpayers who have ignored repeated correspondence and face-to-face visits. If you are proactive, file your returns on time, and stay in touch with your accountant, you are highly unlikely to be affected. The greatest risk lies in doing nothing.


How we can help


At MSF Associates, we work with restaurants, cafés, and takeaways across the UK to keep their finances on track. Whether you need support filing your return, setting up a Time to Pay arrangement, or planning ahead for next year, we are here to help. To find out how we can work together, call 0113 240 4100 or book a call with one of our accounting experts.


Restaurants, cafes, and takeaways can benefit greatly from working with a specialist accountant. If you hadn’t noticed already, we are specialist accountants in Leeds for food service businesses, so unlike most accountants, we have years of experience working with businesses just like you. If you're interested in finding out more about how we can help your restaurant become more profitable, book a call with one of our accounting experts.