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HMRC halves use of external debt collectors

HMRC halved its use of private sector debt collection agencies over the last year, following public criticism of their behaviour when pursuing outstanding tax bills.

According to UHY Hacker Young, £6.8m was spent on external debt collectors in 2014 compared to £14.8m in 2013.

HMRC started using external debt collection agencies in 2009 as it came under pressure to maximise its tax take. The Revenue’s use of these agencies reached a record high in 2013.

Mark Giddens, head of private client services at UHY Hacker Young, said: “Debt collection agencies are rarely the most appropriate way for HMRC to collect unpaid taxes.”

There are often issues regarding communication within HMRC, and ccommentators have suggested that breakdowns in communication between HMRC and debt collectors can lead to taxpayers being pursued on the basis of incorrect or out-of-date information.

“HMRC need to be absolutely certain that they are correct when employing these sort of tactics. 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,” Giddens.

HMRC has already controversially received powers to demand that disputed tax be paid to it up front – they are also pursuing powers to take unpaid tax directly from people’s bank accounts.

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