HMRC powers to take cash from bank accounts update with Friday August 28 2026 deadline

HMRC powers to take cash from bank accounts update with Friday August 28 2026 deadline A tax expert has given her take.

Key points

• Choose Daily Mirror as a 'Preferred Source' on Google News for quick access to the news you value.
• The firm additionally argues that more consideration should be given to existing alternatives, including Time to Pay arrangements.
• For millions of taxpayers, that represents a significant new intervention by the tax authority and it is essential that the safeguards are robust.
• One of the more controversial aspects of these proposals is that funds could be taken directly from bank accounts through an automated process.
• Taxpayers should be able to appeal not only the deduction notice itself but additionally whether the amount HMRC states is owed is correct.

Up to 4.8 million individuals and businesses owing around £4 billion in tax debts could potentially fall within the scope of new HMRC powers allowing capital to be taken directly from taxpayers' bank accounts.

Meanwhile, a administration consultation on tackling lower-value tax debts. It closes on Friday, August 28, 2026, proposes that, after HMRC's existing debt collection processes have been exhausted and where taxpayers have repeatedly failed to engage, the department could instruct banks and building societies to produce direct monthly deductions from a taxpayer's account to recover outstanding debts. HMRC estimates that the measures could apply to debts of up to £5, 000 for individuals and £10, 000 for businesses.

In its response to the consultation, accountancy and business advisory firm BDO has cautioned that the Administration must introduce stronger safeguards before giving HMRC the power to recover tax debts through direct monthly deductions.

Dawn Register, a tax dispute resolution partner at BDO, remarked: These proposals would provide HMRC the ability to recover lower value tax debts by taking funds directly from individuals' and businesses' bank accounts. For millions of taxpayers, that represents a significant new intervention by the tax authority and it is essential that the safeguards are robust.

While we backing HMRC taking action against those who deliberately refuse to pay tax or engage with the tax authority, the proposals raise notable questions around affordability, taxpayer rights and whether HMRC has sufficient resources to operate the system fairly. One of the more controversial aspects of these proposals is that funds could be taken directly from bank accounts through an automated process.

"That makes it particularly significant that taxpayers are given adequate notice, clear information concerning their rights and a meaningful opportunity to challenge HMRC's view of the debt before any deductions are created. Taxpayers should be able to appeal not only the deduction notice itself but additionally whether the amount HMRC states is owed is correct."

BDO believes further detail is needed on how the proposals will work in practice and has pressed HMRC to publish more information concerning the taxpayers who could be affected. In particular, the firm remarked HMRC should provide a breakdown of how numerous of the 4.8 million taxpayers in scope are individuals and how plenty of are businesses.

Dawn continued: Before introducing powers to access funds directly from taxpayers' accounts, HMRC should be clearer concerning who would be affected and why existing debt collection tools are not achieving the desired results. There is additionally a fundamental question concerning whether sufficient effort has been created to understand why numerous taxpayers are not engaging with HMRC in the first place. Any solution should address the root causes of tax debt, not simply the symptoms.

"We backing fair and effective tax collection. Nevertheless, powers that allow HMRC to reach directly into taxpayers' bank accounts should only be introduced when the safeguards, appeals process and affordability protections are fully developed and clearly understood. Before any full-scale roll-out of these intends, we would strongly suggest this is trialled for corporate debts first before being employed for individuals."

BDO's response to the consulation identifies three principal reservations with the proposals.

Notably, the firm additionally argues that more consideration should be given to existing alternatives, including Time to Pay arrangements. It HMRC has previously noted achieve high levels of successful repayment.

Laying out the consultation, HMRC remarked: The power could enable HMRC to collect these debts by deducting affordable monthly instalments directly from the customer's UK bank or building society account. The customer would be notified in advance and given a final opportunity to pay or contact HMRC.

Although the upper value limits have not been decided at this stage, HMRC does not expect debts in scope to exceed £10, 000 (including any interest and penalties at the point of action). We are additionally mindful that there may be a need to apply a lower debt value limit for individuals.

"At any point during the enforcement process, the customer would be encouraged to get in touch to settle the debt or discuss an alternative arrangement if the automated deductions are not suitable for their circumstances."

For now, HMRC powers to take cash from bank accounts update with Friday August remains the part of the story worth watching, and further updates are likely as more details are confirmed.