HMRC bank account raid powers spark concern over burden of proof

HMRC s upcoming new powers, which allow it to recover tax debts directly from bank accounts, raises questions about how the taxman calculates debt. The new powers, unveiled by Chancellor John Healey in the Budget, effective from July 2029, will allow HMRC to automatically deduct debts from holders who fail to engage with the taxman despite being able to pay. The powers extend to tax debts up to £5,000 for current and savings accounts, and up to £10,000 for companies. Under the current direct recovery of debts rules, HMRC can take money directly from accounts only if the debt is over £1,000, provided at least £5,000 remains in the accounts. This is Labour s latest move to close Britain’s tax gap. The difference between tax owed and collected stands at £59.2bn in the 2024/25 tax year. The government estimated that the new powers will help raise £50m within the first year, £255m in 2030/31 and £320m in 2031/32. James Kipping, head of private client at MHA, said that despite H