NEWS: HMRC halve their spend on Debt Collection

HMRC halved its use of private sector debt collection agencies over the last year, following public criticism of their behaviour when pursuing outstanding taxes.

£6.8m was spent on external debt collectors in 2014 compared to £14.8m in 2013.

HMRC started using external debt collection agencies in 2009 it came under pressure to maximise its tax take. The Revenue’s use of these agencies reached a record high in 2013.

HMRC has already received powers to demand that disputed tax be paid to it up front – they are also pursuing powers to take unpaid tax directly from people’s bank accounts.

Comment

Debt collection agencies are rarely the most appropriate way for HMRC to collect unpaid taxes.There are often issues regarding communication within HMRC, and we often find that breakdowns in communication between HMRC and debt collectors can lead to taxpayers being pursued on the basis of incorrect or out-of-date information.

HMRC need to be absolutely certain that they are correct when employing these sort of tactics. There is no guarantee that HMRC’s databases are exactly up to date. The danger is that if errors are made then taxpayers are left out-of-pocket, incurring unnecessary costs fighting for their own money against a government agency.

Having spoke to a number of these agencies and HMRC in the course of our work, we are often told that the “computer automatically spits out penalties where it thinks it should do so”. Perhaps the next years spend on debt collection agencies could be halved with the balance going towards better IT and better communication between HMRC and its customers and the accountants that represent them.

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