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The HMRC said its direct recovery of debts (DRD) powers have helped it raise £178 million of tax revenue.
The DRD measure came into effect on 18 November 2015 under Schedule 8 of the Finance (No.2) Act 2015. This new legislation gave HMRC the administrative power to secure payment of tax debt directly from the debtor’s bank and building society accounts under certain conditions.
The measure is aimed at those debtors who have repeatedly ignored attempts by HMRC to collect tax debts owed, despite having the means to pay.
DRD was fully implemented into HMRC’s operational process at the end of March 2016, and the tax authority has now provided a review of the first two years of activity, as required under the legislation.
The report reviewing DRD recovery action, completed between April 2016 and December 2018, reveals that £178 million of tax revenue has been successfully collected.
There were 22,667 cases in that time, with 1,576 information notices issued. Over the two years, HMRC took action by removing money directly from a bank account 19 times, collecting £361,678 in total.
According to the HMRC, the findings demonstrate that DRD has had a significant deterrent effect, leading to improved recovery of tax debts.
In regard to objections raised by taxpayers, the main reasons given for objecting were either disputing the tax debt owed or on the grounds of exceptional hardship.
The HMRC noted there was a total of eight objections, seven of which were not upheld.
"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," the HMRC concluded.