HMRC, in a desperate push to increase tax take, has over the last two years increased its use of distraint to seize the assets of late-payers. In fact HMRC's use of distraint has increased four times, rising to 7004 in the last twelve months to April 2011, up from 1,675 in the tax year ending April 2009.
Stuart McNeill, Partner in the Litigation and Dispute Resolution team at McGrigors, is wary of the increase and notes that the assets seized are often at "fire sale" prices that do not cover the tax liability.
He states:
"It is almost inevitable that this is resulting in a more aggressive approach and short cuts, but as well as having drastic implications for late-paying businesses and their other creditors, it may also be counterproductive.
By barging in and selling the assets of a late paying company without making a proper commercial assessment of the firm’s medium term viability, HMRC risk sacrificing full payment in a few months’ time for far less cash up front."
Additionally, by forcing insolvencies on companies during a sever recession, HMRC is damaging the economy as a whole.
Tax does have to be taxing.
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As an HMRC Debt Collector, I can confirm that I am under constant pressure to increase the amount of levies I do. These are seen as preferable to short term payment agreements. The stats our bosses seem most proud of are the vastly increased number of levies, and the number of firms and induividuals wound up or bankrupted.These people never see taxpayers, never see the damage done ,do not see life from " the other side". There is a constant deluge of new fines,penalties and surcharges to collect. People are getting close to breaking point.
ReplyDeleteAs an Admin Assistant, I used to watch my line manager glued to his screen with excitement, his head going from right to left after I had emailed him an excel block of default surcharge or Mis dec penalty stats.
ReplyDeleteYou could see the nastiness boil up if these stats were not produced precisely or on time. The higher the penalty total, the more content my manager seemed as he lifted his coat to go home.
You are a just a machine, and as above says a selfishness has encroached where lower grade staff and taxpayers on the outside are seen as garbage.
As the recipient of several of these 'billet deux's'I chanced to see the small font in the right hand corner which (barely) revealed that It was within my right not to permit entry to my residence....I therefore felt that if it was of pressing importance to HMRC, they could bally well spend taxpayer's money and take me to court.
ReplyDeleteThe silence was deafening........
"As the recipient of several of these 'billet deux's'I chanced to see the small font in the right hand corner which (barely) revealed that It was within my right not to permit entry to my residence....I therefore felt that if it was of pressing importance to HMRC, they could bally well spend taxpayer's money and take me to court.
ReplyDeleteThe silence was deafening........"
Why not just pay your tax on time instead of wasting taxpayers money?
@18.50
ReplyDeleteYep that's the thing to do. Don't pay your tax on time, ignore warning letters, and then when your belated court summons arrives months later,you can whinge on internet forums that it's not fair.
Judges in the County Court are normally soooo understanding of this sort of attitude.....
"Why not just pay your tax on time instead of wasting taxpayers money?"
ReplyDeleteOh yeah, then HMRC can waste it on failed IT projects. Stand your ground @19:22 the chances are they will cock up the paperwork and you will win.
Two sides to this. HMRC has the right to expect tax payments/charge interest etc. where due but people still have the right to explain why they can't make these payments as suggested and come to some kind of arrangement with HMRC.
ReplyDeleteIt's when both side decide to put up a pointless fight that things become protracted.
"It's when both side decide to put up a pointless fight that things become protracted."
ReplyDeleteFair comment but how many of these cases are caused by HMRC not being able to process cases in a timely manner.
00.30 "Fair comment but how many of these cases are caused by HMRC not being able to process cases in a timely manner"
ReplyDeleteIn my 25 years HMRC experience, I would say less than 2% of cases by the time it gets to a debt collector, but I don't expect many people to belive me!
@23.05
ReplyDeleteNo. Chances are that HMRC will NOT cock up the paperwork,and you'll end up with a CCJ.
But then of course your forum sympathisers will all rally round to help you out. Not.
@17 November 2011 00:30
ReplyDeleteThis is a rather redundant comment, as it doesn't start becoming a debt until you fall behind on payment.
As 17 November 2011 17:22 pointed out, HMRC usually offers a multitude of options before distraint by a court appointed bailiff or (rather unfortunately latterly due to privatisation) the use of debt collectors.
Half of the people who claim they 'aren't accountants' can be seen to have made obvious errors on their P46 e.g. claiming that two jobs are their main or only job, but increased automation and the fact 30,000 HMRC staff just aren't there any more to check simple errors made by taxpayers and able to swiftly rectify them through human intervention just creates a minefield. Especially as forms P46 are sent electronically.
The government wants to increase automation in the form of RTI. Be very suspicious of this as when no HMRC staff are left, people won't be able to argue with a computer for keying errors when they themselves f"£$ up, but at least they'll realise the effect of their mistakes a lot sooner.
@19.42
ReplyDelete"before distraint by a court appointed bailiff"
Actually, before distraint by HMRC staff working in Field Force.
@20:02
ReplyDeleteSorry I don't work in that area. Although in a way I'm glad I don't as I imagine it in desperate cases it must be soul-destroying to be asked to carry out the work that you do.
If you don't enjoy seeing grown men cry, as all their dreams come crashing down,yeah, it can be a bit crap.
ReplyDeleteHMRC can't just keep handing out Time to Pay Plans willy nilly as it does nothing to encourage people to pay on time. That's why collectors ask customers why they need a Time to Pay as part of the negotiation. If it's a genuine hardship case (after income and expenditure is done etc), and they generally paid well up until that point, and will in future, fair enough. But as a collector I've heard all sorts of excuses for not wanting to pay tax on time, and instead pay it at a later date (at minimal instead i.e a loan courtesy of you - the tax payer). Some ranging from the common one "I need the money to put my wife/child through university" to "well how do you expect me to take the kids on holiday this year". Always remember around 95% of all tax payers, pay their tax on time - even during these hard times.
ReplyDeleteHow to reverse boycott debt collectors.
ReplyDeleteWhen a debt collector/debt collection/debt buyer company can repeatedly call with the intent of getting money their customers can repeatedly answer or call back with the intent of not giving them any. They need people to pay with as little talk as possible. They don't want to talk with people who know they are never going to pay. Be all talk and no pay. Answer when convenient. Call back. Give no information. Verify nothing. Ask as many questions as you can. Answer none.
Don't ignore/block/report them. It doesn't work. These folks want you to ignore them for as long as you can stand to or until you give them something valuable like money or information. Ignoring them is being their good customer. Sending a cease and desist is giving information. It lets them know you are still alive and remain their good customer. Preparing to initiate unlikely individual legal battles is being their good customer.
Be their bad customer. Make them talk to you fruitlessly for as long as they can stand to or until they stop selecting you as their customer. These companies cannot spend seconds much less minutes on the phone with every person who will never send them a dime. But they don't know who that is. You do. That knowledge is power. Every second you can keep their staff on the phone will render their business less profitable giving them a reason to never call you again.
Calling will not reset your SOL. Making a partial payment will.
One person who does this likes to ask general questions they should but usually won't answer, "May I have the name and address of your agent for service of process?" Calmly and slowly ask them to spell every word in the address. Read it back for verification. Control the pace. If they are rushing then politely ask them to slowly repeat. "Are you a corporation and if so in which state are you incorporated?" Repeat your questions when you don't get direct answers. When they won't answer a question ask, "Would you like to comply with the business and professions codes of your state?" That is usually the point when they hang up on me but if they say they want to comply then begin your questions again.
Repeat while you have the spare time. These folks have many victims and few operators. If everyone calls back but pays nothing the mass auto-dialer business model becomes unprofitable. Don't aid and comfort the enemy by ignoring them. Call! Have a nice long slow friendly chat! Make them hang up first.
Press 2 for Spanish.
There are certainly enough victims to take down this company so ignoring/blocking seems downright Orwellian to me. Really? We're just going to passively submit and go with a block list or however we manage ignoring an endless stream of unwanted phone calls day after day? No! Unite or remain conquered. Answer/return every call - become well practiced at keeping these folks on the phone - or count yourself not amongst the free.