Yes. In certain circumstances, HMRC can recover unpaid tax directly from a company’s bank or building society accounts using Direct Recovery of Debts (DRD).
HMRC cannot simply remove money without warning. The debt must meet specific conditions, safeguards apply, and the company is normally given an opportunity to object before funds are transferred.
💡 Quick Answer
HMRC can take money directly from a company’s bank account through Direct Recovery of Debts.
HMRC currently uses DRD where qualifying tax debt exceeds £1,000 and attempts to resolve the debt have not succeeded.
Safeguards include:
- HMRC must leave at least £5,000 across the debtor’s accounts;
- the company is notified when funds are held;
- there is normally a 30-day period to object; and
- HMRC should already have tried to contact the company about the debt.
If your company genuinely cannot afford to pay HMRC, the underlying tax debt should be addressed before enforcement escalates.
What Is HMRC Direct Recovery of Debts?
Direct Recovery of Debts allows HMRC to require banks and building societies to hold money from accounts belonging to a taxpayer or company with qualifying unpaid tax debt.
If the matter is not resolved during the objection period, the held money can then be transferred to HMRC.
DRD was restarted in 2025 and expanded again from April 2026, making it increasingly relevant to companies that have persistent HMRC arrears.
It is different from HMRC using enforcement agents to take control of goods and is also different from a court-issued freezing injunction.
When Can HMRC Take Money From a Company Bank Account?
HMRC does not normally use Direct Recovery of Debts as the first response to a missed tax payment.
Current HMRC guidance says DRD may be considered where:
- more than £1,000 is owed;
- the debt has been established;
- relevant appeal periods have passed;
- attempts to contact the taxpayer have repeatedly been unsuccessful; and
- there is sufficient money available in the accounts.
HMRC describes the measure as being aimed particularly at taxpayers who can afford to pay but choose not to engage or settle the debt.
If your company cannot pay because of genuine financial difficulty, engaging with HMRC early is therefore extremely important.
Our wider guide explains how HMRC debt collection works.
How Much Money Can HMRC Take?
HMRC cannot simply empty every company account.
Under the current Direct Recovery of Debts safeguards, HMRC must leave an aggregate balance of at least £5,000 across the debtor’s accounts.
That means the protection applies across the accounts collectively rather than leaving £5,000 in each individual account.
HMRC can seek to recover qualifying debt from money above that protected level.
Will HMRC Warn You Before Taking the Money?
Yes.
Before DRD is used, HMRC should already have made repeated attempts to contact the company about the outstanding debt.
Once HMRC instructs the bank, the relevant funds are initially held rather than immediately transferred.
The company receives notice of the action and normally has 30 calendar days to object.
For companies and LLPs, HMRC does not usually need to make a face-to-face visit before using DRD, although there should still have been previous opportunities to discuss the debt.
Can a Company Object to Direct Recovery of Debts?
Yes.
A company may be able to object where, for example:
- the tax debt has already been paid;
- the amount HMRC says is due is incorrect;
- the bank account does not belong to the debtor;
- another person has a beneficial interest in the money; or
- the hold would cause exceptional hardship.
Objections normally need to be raised within 30 calendar days of the notice.
Directors should act quickly if they believe HMRC has used DRD incorrectly.
Can HMRC Freeze a Business Bank Account?
Direct Recovery of Debts can require a bank to place a hold on specified funds, but that is not the same thing as a court freezing the company’s assets.
A formal freezing order or freezing injunction is a separate legal process designed to prevent assets being moved or disposed of during legal proceedings.
We explain that process separately in our guide to freezing orders for company directors.
What Should Directors Do if HMRC Is Threatening Bank Account Recovery?
Do not ignore HMRC correspondence.
If the company can afford to pay the tax, resolving the debt before enforcement progresses is usually the simplest option.
If the business cannot pay in full, directors should establish whether the problem is temporary or whether the company has a wider solvency problem.
Possible options can include:
- an HMRC Time to Pay arrangement;
- refinancing or improved cash collection;
- a Company Voluntary Arrangement;
- restructuring or Administration; or
- Creditors’ Voluntary Liquidation if the company is no longer viable.
Our HMRC Tax Debt guide explains the wider options available.
Get Help With HMRC Tax Debt
If your company owes HMRC and you are worried about enforcement against its bank account, dealing with the underlying debt early can preserve more options.
Business Helpline provides free, confidential and unbiased initial advice to UK limited company directors facing HMRC arrears and financial distress.
We can help you assess whether the company can realistically recover and explain the restructuring or insolvency options available if HMRC debt cannot be repaid.
Call our free 24-hour helpline on 0800 088 2142 or request a confidential call back.
Frequently Asked Questions
Can HMRC take money directly from a company bank account?
Yes. HMRC can use Direct Recovery of Debts to recover qualifying unpaid tax directly from company bank accounts where the relevant conditions are met.
Does HMRC need a court order before using Direct Recovery of Debts?
DRD is a statutory HMRC recovery power and does not operate in the same way as applying to court for a freezing injunction.
How much must HMRC leave in the account?
HMRC must currently leave at least £5,000 across the debtor’s accounts after applying Direct Recovery of Debts.
Can I stop HMRC taking money from the account?
You may be able to object if one of the permitted grounds applies. The company normally has 30 calendar days after notification to raise an objection.
