Vulnerable customers and the direct recovery of debts

24 December 2015

Direct Recovery of Debts (DRD) which is also referred to as enforcement by deduction from accounts, has introduced a new way for HMRC to recover monies that are owed to the Exchequer. This paper looks to provide reassurance that DRD will affect a small number of individuals and businesses who have made an active decision not to pay, or to delay paying, the money they owe, even though they have sufficient funds in their bank and building society accounts.

Concerns have been raised since DRD was first announced, as to how HMRC will protect vulnerable customers, specifically tax payers who find themselves at the receiving end of enforcement action as a result of these new powers. Full details of how these new powers will operate in practice were published in a briefing in August 2015 and throughout consultation on this new power, the government has been clear that DRD should not apply to vulnerable customers, including those who need additional assistance with their taxes.

Safeguards are in place that guarantee that every debtor 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 officials to:

  • personally identify the taxpayer and confirm it is their debt
  • explain to debtors what they owe, why they are being pursued for payment, and discuss payment of the debt
  • discuss options to resolve the debt, including offering a Time to Pay arrangement to the debtor, where appropriate
  • identify debtors who are in a vulnerable position and offer them the support from a specialist team to help them settle their debts

Indicators for identifying vulnerable customers will include the following:

  • Indicator A - a disability or long-term health condition
  • Indicator B - a temporary illness, physical or mental health condition
  • Indicator C - personal issues
  • Indicator D - lower levels of literacy, numeracy and/or education

Once the debtor has received this face-to-face visit, those who have been identified as vulnerable will not be considered for DRD, and will be given alternative support to help them pay the money they owe.