HMRC to take money directly from bank accounts of tax dodgers

HM Revenue and Customs has assigned dedicated compliance managers to more than 200 billionaires with a UK tax footprint, launching a targeted initiative to address a specific segment of the national tax gap. The move, announced following the recent budget, pairs each identified ultra-high-net-worth individual with a Customer Compliance Manager. These officials will conduct voluntary pre-filing discussions to clarify tax positions and coordinate future interactions. The primary objective is to close the "wealthy tax gap," which HMRC estimated at £3.6 billion for the 2024/2025 period. This figure represents six percent of the total tax gap, defined as the difference between tax due and tax collected. The initiative forms part of a broader strategy to generate at least £500 million in additional revenue. This contribution supports a larger government commitment to claw back £10 billion in extra tax revenues by 2030. To achieve this, HMRC is also hiring 400 new tax specialists. The department intends to deploy advanced analytics, automated triggers, and artificial intelligence to monitor the financial affairs of wealthy individuals. These technologies aim to identify emerging risks earlier and direct compliance resources toward areas of highest impact. The 200 billionaires included in this scheme are those required to submit UK self-assessment returns, even if they are not residents. They join approximately 2,400 other wealthy individuals who already have designated compliance managers. HMRC noted that the tax affairs of these top earners often span multiple taxes, entities, and jurisdictions, creating complexities that standard administrative processes struggle to manage. A separate definition of "wealthy" for monitoring purposes includes individuals with income exceeding £200,000 or assets over £2 million in any of the last three years. James Murray, the financial secretary to the Treasury and paymaster general, stated that wealthy taxpayers contributed £160 billion in tax receipts in 2025 to 2026. He emphasized that the 1.3 million individuals in this demographic play a significant role in the economy. Murray argued that effective administration requires HMRC to possess a joined-up understanding of their diverse circumstances, which include businesses, investments, trusts, and international jurisdictions. The goal, according to HMRC, is to reduce unnecessary contact while identifying potential problems early. This crackdown follows criticism from the Public Accounts Committee in July of the previous year. At that time, the government’s spending watchdog found that HMRC lacked sufficient oversight regarding how many billionaires paid tax in the UK. The committee concluded that significant opportunities to collect more revenue were being missed due to this lack of tracking. In response, HMRC has compiled its first comprehensive list of billionaires liable for UK tax, regardless of their formal residency status. Simultaneously, the government has granted HMRC new powers to recover unpaid tax debts directly from bank accounts. Under these provisions, which are scheduled to begin in July 2029, HMRC can instruct banks to make regular deductions from current accounts to settle debts held by individuals or companies who can afford to pay but repeatedly ignore contact. The maximum debt pursued under this specific mechanism is capped at £5,000 for individuals and £10,000 for companies. The measure is projected to yield an additional £320 million in revenue for the 2031-32 fiscal year. A notable aspect of the new powers is their application to joint bank accounts. While the government stated it would only consider joint accounts if no viable sole account existed, it confirmed that joint accounts remain within scope. HMRC will notify the non-debtor party prior to any deduction and provide an opportunity to object. However, the government rejected calls to establish a mandatory minimum balance that must remain in the account after deductions. Officials argued that existing safeguards, such as the right to appeal and tailored affordability assessments, provide sufficient protection. Critics have raised concerns about the proportionality of these measures. Andrew Griffith, the shadow chancellor, described the move as absurd, accusing the government of empowering the tax authority to deplete bank accounts over relatively small amounts, potentially leaving individuals unable to pay rent. Adam Craggs, head of tax at the law firm RPC, advised that anyone with income over £200,000 or net assets above £2 million should review their ability to evidence their UK tax position. The Association of Taxation Technicians urged caution, stating that HMRC should ensure adequate safeguards are in place before implementing these powers to prevent misapplication. The new debt recovery powers apply to a substantial pool of unpaid liabilities. HMRC estimates that around 4.8 million people and companies hold debts below £10,000, totaling approximately £4 billion. For individual customers, the average debt in this category stands at £950. Previous powers allowing direct deductions from accounts for debts over £1,000 were introduced in 2015, paused during the pandemic, and reinstated by the current government in 2025. The new regime lowers the threshold significantly, targeting smaller, persistent debts that previously fell outside the scope of direct debit enforcement. Alongside these measures, the budget included plans to hold online marketplaces responsible for collecting tax from third-party sellers. This policy aims to target foreign sellers who exploit regulatory gaps to avoid Value Added Tax. The government expects this change to raise up to £1 billion, with proceeds earmarked for reducing business rates for high-street retailers. The Treasury declined to comment on specific rumors regarding bank taxation, noting that tax decisions are matters for the chancellor to outline during fiscal events. The department maintained that it does not routinely comment on speculation or unannounced proposals.