Firms urged to settle overdue tax swiftly as some companies across the UK have begun receiving letters from HMRC.
HMRC is warning that the tax authority may exercise its revived powers to recover overdue tax directly from their bank or building society accounts.
These letters mark the first wave of firms contacted under the revived Direct Recovery of Debts (DRD) process. HMRC paused DRD during the COVID-19 pandemic but reinstated it earlier in 2025, entering a “test and learn phase.” The renewed use remains tightly controlled and is initially limited to a small number of businesses.
Under DRD, HMRC may recover tax debts of £1,000 or more directly from eligible accounts, provided the debt is firmly established, the appeal windows have passed, and other recovery methods, including repeated contact attempts, have been unsuccessful. Before funds are seized, HMRC will conduct a face-to-face visit to confirm identity, explain the debt and discuss alternative options such as a payment plan.
Businesses that receive such a letter — or suspect they might soon — should consider contacting HMRC promptly to arrange a “time to pay” agreement and avoid direct recovery.
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