Important HMRC Changes: Paperless Letters and Direct Recovery Explained
HMRC accelerates the shift to digital communication
Starting in spring 2026, HMRC will stop sending most paper letters as it moves towards a "digital by default" model. This change is part of a broader plan to ensure that 90% of interactions with the tax authority are online by the 2029/30 tax year.
What this means for you Instead of receiving automatic postal letters, taxpayers will get email alerts directing them to view new documents in their personal tax account or the HMRC app. This shift aims to improve the speed and reliability of communications while saving an estimated £50 million a year in print and postage costs.
If you already use the HMRC app or a personal tax account, you will be among the first to see this change. When you log in, you may be prompted to provide or confirm your email address and mobile number. Rest assured that these details are used solely to alert you when new correspondence is waiting for you online.
Exceptions and safeguards HMRC has confirmed that paper letters will not disappear entirely. Taxpayers who are digitally excluded, or those who actively opt out, will continue to receive traditional post. Safeguards are being put in place to ensure that the elderly, those with disabilities, or anyone unable to access digital services can still rely on paper communication.
Legislation in the Finance Bill 2025/26 will grant HMRC the power to require digital contact details from users of its online services. As the rollout begins in spring 2026, systems will be updated gradually to support this transition.
Direct Recovery of Debts resumes
In a separate update, HMRC has resumed its powers to recover overdue tax directly from the bank or building society accounts of businesses. Known as the Direct Recovery of Debts (DRD), this process was paused during the COVID-19 pandemic but was reinstated earlier in 2025.
How it works HMRC is currently in a "test and learn phase" with this power, meaning its use is tightly controlled and initially limited to a small number of cases. Under DRD, the tax authority can recover debts of £1,000 or more directly from eligible accounts.
However, this is a measure of last resort. Funds will only be seized if:
The debt is firmly established.
All appeal windows have passed.
Other recovery methods, including repeated attempts to contact the business, have failed.
Safeguards for businesses Before any funds are taken, HMRC will conduct a face-to-face visit to confirm the taxpayer’s identity, explain the debt, and discuss alternatives. This visit provides a crucial opportunity to discuss options such as a "Time to Pay" agreement, which allows businesses to spread the cost of their tax bill over manageable instalments.
If your business receives a letter regarding DRD, or if you suspect you might be at risk, it is essential to act quickly. Engaging with HMRC early is the best way to avoid direct recovery and arrange a payment plan that works for you.
We are here to help
Navigating these administrative changes can be distracting when you are trying to focus on your company's growth. At Zyla Accountants, we help you understand your obligations so you can stay compliant without the stress.
Whether you need assistance managing your digital tax accounts or advice on efficient cash flow management to avoid arrears, our team is ready to support you.
Get in touch with Zyla today and let’s work together to grow your business.