HM Revenue and Customs has halved its use of external debt collection agencies over the course of the last 12 months, following criticism from the public when it previously chased outstanding tax bills. Almost £7 million was spent on private debt collection agencies in 2014, compared with almost £15 million back in 2013.
The use of external debt collectors by HMRC stems back to 2009 where they began using them following pressure to maximise the amount of tax that they got back from people. A source said:
” Debt collection agencies are rarely the most appropriate way for HMRC to collect unpaid taxes. HMRC need to be absolutely certain that they are correct when employing these sorts of tactics.”
Experts have previously suggested that a lack of communication between HMRC and external debt collectors can occasionally lead to taxpayers being wrongly pursued on the basis of incorrect or out of date data.
The source added:
“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 and fighting for their own money against a Government agency.”
HMRC already has the power to demand that disputed tax be paid upfront and it is also pushing to be given authority for the ability to get unpaid tax directly from taxpayers’ bank accounts.