From the date of Royal Assent to Finance (No 2) Bill 2015, HMRC will have the power to instruct banks and building societies to deduct amounts to settle a person's tax debts directly from their accounts. TolleyGuidance has produced a guidance note on direct recovery of debt which provides details of how the process will work, including how the taxpayer can make an objection to HMRC.

Background

The proposal for HMRC to have the ability to instruct banks and building societies to deduct amounts to settle taxpayers' tax debts directly from their bank accounts caused controversy when it was announced in Budget 2014.

The consultation on direct recovery of debts (DRD) was published in May 2014. For details of some of the issues raised at the time, see 'A power too far' by Mike Truman in Taxation Magazine on 6 August 2014.

The Government listened to the objections but was determined to push ahead with the policy. The summary of responses, published in November 2014, promised significantly strengthened the taxpayer safeguards. For commentary on these safeguards, see 'Power drain' by Mike Truman in Taxation Magazine on 26 November 2014. The draft legislation was published in December 2014, although it was subsequently not included in FA 2015, see 'Still saying no?' by Mike Truman in Taxation Magazine on 14 January 2015.

Instead DRD is to be legislated in Finance (No 2) Bill 2015 and is to come into effect from the date of Royal Assent. This guidance note discusses the provisions as published on 15 July 2015 as they will apply to individuals.

Whilst Finance (No 2) Bill 2015 renames the provisions as 'enforcement by deduction from accounts', this guidance refers to the provisions as 'DRD' as this is the term with which advisers are familiar.

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