HMRC has increased the amount that it spends on using debt collection agencies to chase up tardy taxpayers, in fact HMRC has more than doubled the amount it spends on debt collection agencies from £5.8M in 2011 to £13.4M in 2012.
Mark Giddens, head of private client services at UHY Hacker Young, is quoted by the FT:
“HMRC is under a lot of pressure to increase its tax take, and bringing in professional debt collection agencies to follow up on debts is seen as a cost effective.Quite so, the "success" or otherwise of farming out debt collection to the private sector depends very much on the quality of the private sector firm used and the validity of the information they are given to work with.
The less professional end of the debt collection market has a reputation for being over-zealous and trying to collect the debt no matter what.
On top of this, communication between the different parts of HMRC can occasionally break down, with in-house teams pursuing taxpayers for debts that have already been paid or aren’t owed in the first place. It’s important that HMRC gives debt collection agencies the correct information to work from.”
It is also worthwhile remembering that once you have unleashed the hounds, it is sometimes rather difficult to rein them back in.
Please feel free to share your experiences of HMRC's debt collection tactics.
Tax does have to be taxing.
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