This week's opinion: 2 May 2019

Readers will recall the controversy surrounding the introduction of the direct recovery of debt (DRD) rules. Indeed, this magazine organised a petition against them. HMRC has published a review of the operation of the process in its first two years and it makes interesting, if somewhat contradictory, reading. The headline figure is that £178m of debt was collected. Delve deeper into the figures however and you find that only £361,678 was recovered directly from bank accounts. And this was from only 19 taxpayers.

HMRC’s explanation is that the existence of the DRD rules was enough to persuade people to pay up before formal action was taken. This may be the case, but it is difficult to know whether the money would have come using existing enforcement rules or whether the DRD regime made the difference. The consultation estimated the cost to HMRC of implementing DRD over a five-year period as £800,000. On that basis, assuming recoveries continue at the same rate, the amount collected under DRD could almost be wiped out by the implementation costs. Has it been worthwhile or is it another example, as many people argued at the time, of HMRC being given another power that it did not need?

I was more sympathetic than others about the principle of DRD, but shared concerns that the powers might be used even if there was real doubt about the validity of the debt. The processes that have been put in place seem to have allayed those fears and it is right that this should be acknowledged.

If you do one thing…

Have you applied for exemption from MTD for VAT clients (see Notice 700/22, section 3 (tinyurl.com/vn70022)). The CIOT is monitoring the way the exemption is working and welcomes feedback at technical@ciot.org.uk.