HM Revenue and Customs has restarted a controversial policy that allows it to recover unpaid tax directly from debtors’ bank accounts, including cash Isas.

The direct recovery of debts (DRD) scheme, first introduced in 2015, was paused during the Covid-19 pandemic but has now resumed under a “test and learn” approach. HMRC said the powers would only be used in cases where businesses or individuals owe at least £1,000, have exhausted their appeals process and have repeatedly ignored requests to pay.

The system allows HMRC to require banks and building societies to transfer money directly from accounts where the debtor has sufficient funds. Safeguards mean at least £5,000 must be left untouched to cover essential household or business expenses such as mortgages, wages or utility bills.

In its guidance, HMRC stressed the measure targets only a minority of taxpayers who “choose not to pay, even though they have the means to do so.” It said most people settle their tax bills in full and on time.

Dawn Register, tax dispute partner at BDO, said the move underlines the government’s determination to crack down on avoiders as public finances come under strain. “For those struggling financially we would always recommend exploring time-to-pay options,” she said. “HMRC needs to strike the right balance between supporting businesses and individuals in genuine financial difficulty, while being assertive with those who can afford to pay but choose not to.”

Missed deadlines or unaddressed disputes could lead to HMRC bypassing usual collection routes and moving directly to bank recovery. Businesses facing cashflow challenges are urged to contact HMRC early to agree repayment schedules rather than risk enforcement action.

An HMRC spokesperson said: “It’s right that we seek to recover tax from the tiny minority who have the funds to pay but refuse to. These powers are subject to robust safeguards and we’ll continue to support customers who need help with their payments.”