HMRC spend on debt collectors increases

In a bid to close the tax gap and chase up recalcitrant taxpayers, HMRC has ramped up spending on private sector debt collectors by 62% in the last year to reach £39m, compared to £24m in 2016

The latest figure is more than triple the amount spent on outsourced debt collection in 2015 (£12.5m), and over six times the £6.2m spent in 2014, according to analysis by UHY Hacker Young.

The firm says that the steep rise in spending on private sector debt collectors could suggest that HMRC may be stepping up the pressure on people who cannot pay their tax bills as it continues its ‘dash for cash’.

UHY Hacker Young also warns that there can sometimes be a lack of effective communication between HMRC and their private sector debt collectors. As a result, some debt collectors have chased debts that have already been paid to HMRC or that HMRC has never been in contact with the taxpayer about.

The firm says many debtors actually cannot afford to pay their tax bills on time, so they are not wilfully ignoring their debts. As a result, strict methods used by private sector debt collectors may not be the fairest approach.

Mark Giddens, head of private client tax at UHY Hacker Young, said: ‘HMRC is under increasingly heavy pressure to ramp up its tax take but must do its utmost to see that the public are not unnecessarily pestered.

‘Private sector debt collectors have been accused in the past of taking a gloves-off approach. Some say that using private collectors is the wrong way to chase debtors, especially as many can’t – rather than won’t – pay their debts’.

HMRC said in a statement that debt collection agencies operate under strict codes of conduct to pursue debt.

‘Where someone thinks they will have problems paying the amount due, they should get in touch straight away. All requests for further time to pay an amount due are considered individually based on the facts of the case,’ an HMRC spokesman said.

Accountancy Daily