Direct Recovery of Debts intervention – two year review

29 April 2019

 

A review of Direct Recovery of Debts (DRD) activity has been published which concludes that the DRD intervention has achieved its policy objectives and has provided HMRC with a crucial lever in tackling those debtors who deliberately choose not to pay their tax debts while being able to afford to do so.

 

Direct Recovery of Debts (DRD) became operational in March 2016 and gives HM Revenue and Customs (HMRC) the power to recover established debts directly from debtors’ bank and building society accounts.

 

The intervention targets those debtors who can and should pay but have repeatedly refused to do so. The measure, therefore, helps HMRC achieve its objective of maximising the collection of legally due tax revenue essential to the proper funding of vital public services while ensuring a fair and level playing field for the vast majority of taxpayers who pay their taxes in full and on time.

 

When announced at Budget 2014, ministers agreed HMRC would provide Parliament with a full review of DRD after the policy had been operational for two years.

 

HMRC has now delivered that commitment by reviewing DRD activity from April 2016 until December 2018 and published the report ‘Review of the direct debt recovery intervention’.

 

This report considers whether the key policy objectives - reducing tax debt owed by securing payment in full, ensuring a fairer tax system and providing better value for money - have been achieved through focusing on the following elements:

 

  • Effectiveness in collecting tax debt
  • Impact on debtors, including vulnerable taxpayers

HMRC is committed to identifying vulnerable customers and providing those customers with the extra support they need to manage their tax affairs. Such customers once identified, are excluded from the DRD process.

 

 Additional tax revenue totalling £178 million was recovered through DRD intervention, reducing any unfair advantage those debtors have over the compliant majority.

 

The low level of complaints, objections and appeals, the extremely low level of these being upheld, and the small proportion of vulnerable customers identified further confirm that the correct debtors are being taken through formal DRD processes.

 

The full report is available to read on GOV.UK.