Revenue told to chase mountain of tax debt

A National Audit Office report on the recovery of debt by the Revenue published this week revealed that, as of 30 March 2003, a huge debt mountain has built up, with £3bn more in tax than a year ago.

Comptroller and auditor general Sir John Bourne said the Revenue had improved the way it recovered debts, but could make further improvements to reduce debts owed by taxpayers.

‘Faster recovery and preventing the build-up of debt could bring in money that could be used to improve public services. My report identifies further opportunities for the Revenue to improve how it collects debts,’ he said.

Public Accounts Committee chairman Edward Leigh said the credibility of the tax system was at stake, because it depended on money owed being collected promptly and efficiently.

‘For this reason, it is of the highest importance that the Revenue rapidly makes some inroads on the mountain of tax which is currently owed. Law-abiding taxpayers can all think of many better uses for this money than sitting in the pockets of inveterate debtors,’ said Leigh.

Bourne added that a significant proportion of this debt was owed by insolvent businesses, by taxpayers who could not be traced, or was under negotiation or being paid off under installment arrangements.

His report recommended the wider use of past payment records and scoring techniques to help identify and advise those who might get into debt. He also urged that the best method of recovery be looked at.

In the year to October 2002, the department wrote off tax and other miscellaneous duties of more than £500m, and in the year to March 2003 £275m was written off in respect of national insurance contributions, which were no longer recoverable.

A spokesman for the Revenue said: ‘We welcome the NAO’s recognition of the progress we have made on debt recovery. We now successfully collect over 99% of the revenue owed, with any revenue not collected usually due to bankruptcy.’

The spokesman went on to say that Revenue chairman Ann Chant would be appearing before the PAC to discuss the report later in the year.

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