Direct Recovery of Debts on PAYE debts

An article in February’s Employer Bulletin explaining that HMRC can now take outstanding PAYE debts directly out of people’s bank accounts may have worried some employers out there. However please let us reassure you that this move is not aimed at care and support employers who have got into difficulty.

Direct Recovery of Debts (DRD) allows HMRC to recover cash directly from the bank and building society accounts, and funds held in cash in Individual Savings Accounts (ISAs), of people who owe them £1,000 or more.

However there are very stringent safeguards to ensure that adequate protection is in place for vulnerable customers and that those who are not vulnerable do not suffer undue hardship once money is taken directly from their accounts. This includes:

  • HMRC only taking action against those who have established debts, have passed the timetable for appeals, and have repeatedly ignored HMRC’s attempts to make contact - anyone who disputes the amount owed has the automatic right to appeal
  • guaranteeing that every person who owes HMRC money will receive a face-to-face visit from HMRC agents before their debts are considered for recovery through DRD, this meeting will provide a further opportunity for HMRC to:
  1. personally identify the taxpayer and confirm it is their debt
  2. explain to them what they owe, why they are being pursued for payment, and discuss payment of the deb
  3. discuss options to resolve the debt, including offering a Time to Pay arrangement, where appropriate
  4. identify those who are in a vulnerable position and offer them the support from a specialist team to help them settle their debts
  • only debtors who have received this face-to-face visit, have not been identified as vulnerable, have sufficient money in the bank and have still refused to settle their debts will be considered for debt recovery through DRD
  • only considering the use of DRD on those with tax and tax credits debts of more than £1,000
  • always leaving a minimum of £5,000 in the person’s accounts, so that HMRC do not put a hold on money needed to pay wages, mortgages or essential business or household expenses

To be clear, those who are identified as vulnerable will not be considered for DRD, and will be given alternative support to help them pay the money they owe.

HMRC say that a vulnerable person could include those with a disability, mental health condition or learning difficulty that directly impacts on their ability to communicate with HMRC or to manage their HMRC affairs, meaning they are unable to understand or appreciate their indebtedness.

HMRC’s indicators for identifying other vulnerable customers can be found on GOV.UK.

Information on what to do if you find yourself in difficulty and cannot pay HMRC the PAYE that you owe them can be found on our website.