The crackdown is aimed at the estimated 4.8 million individuals and businesses who owe less than £10,000 in tax, equating to around £4billion.
According to reports, the average unpaid bill among individual taxpayers is £950.
Not everyone in this group is deliberately avoiding paying tax, with factors including a lack of awareness explaining some unpaid bills.
Currently, HMRC can only recover money directly if the taxpayer owes more than £1k and is left with at least £5k.
This figure will be cut to a few pounds in plans due to be announced at Wednesday’s Budget by Chancellor John Healey, according to The Times.
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Officials will also be able to recover outstanding fines and interest, according to the publication.
If introduced, this will allow tax officials to automatically deduct payments from current and savings accounts without obtaining a court order.
HMRC is also reportedly considering using credit reference agencies to assess the finances of those targeted to determine how much they can afford to repay.
Previous proposals suggested deductions could be capped at 50% of disposable income.
Anyone affected would be responsible for challenging the decision, according to reports.
Critics of the mooted plans say vulnerable people could have money taken from their accounts because of administrative errors, illness or missed correspondence.
Dan Neidle, founder of Tax Policy Associates, warned that automated systems could struggle to distinguish between deliberate non-payment and genuine difficulties.
In response, a senior government source told The Times that there would be ‘rigorous’ protections for vulnerable groups.
Metro has contacted the Treasury for comment.
Get in touch with our news team by emailing us at webnews@metro.co.uk.
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