HMRC urged to protect outsourced tax data

hmrc hq

The decision by
HM Revenue and
to trial the outsourcing of part of its debt collection function has
highlighted the need for private-sector suppliers to handle taxpayers’
information sensitively.

Last week Accountancy Age revealed that HMRC plans to outsource some
of its debt collection to unnamed ‘low-value debt specialists’ and sell debt
deemed irrevocable.

The department said any outsourcing would involve a ‘relatively small amount
of money’. In 2007/08 HMRC’s total tax owed was about £17bn.

The outsourcing plan has alarmed business groups and unions, who fear that
private-sector suppliers could be heavy handed and force struggling businesses
to close. HMRC has said it will require suppliers to adhere to high standards.

Nigel Roxburgh, director at the
National Outsourcing
, which represents UK corporate users of outsourcing and
suppliers, said although the taxman has already outsourced large parts of its
operations, such as IT, tax debt collection could be a sensitive service to hand
over to a supplier.

‘[Tax debt] needs careful handling and persistence but firm and continuous
politeness,’ he said. He added that HMRC shouldn’t write targets into
outsourcing contracts that encourage suppliers to be unnecessarily aggressive
with businesses when collecting unpaid tax.

Roxburgh said that outsourcing suppliers need to have sound data security
procedures to safeguard taxpayers’ details. In 2007 HMRC was left red faced
after losing computer discs holding the personal details of 25 million

Jane Finlayson-Brown, outsourcing group partner at law firm Allen &
Overy, said the sensitivity of taxpayers’ information being exchanged means any
outsourcing agreement would need to incorporate confidentiality provisions.
‘These agreements are legally binding and usually contain provisions pertaining
to the security of data and how it is to be handled,’ she said.

A spokesman for the Public and Commercial Services Union, which represents
HMRC staff, said it is in discussions with HMRC about the plan but added
industrial action could not be ruled out due to concerns over possible job

An HMRC spokesman said: ‘We will only proceed with a pilot once we are
satisfied that the benefits outweigh the risks.’

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