Taxman bows to pressure over debt collection practices

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HMRC has dramatically scaled back its use of external debt collection agencies, following mounting criticism over its behaviour when pursuing outstanding tax bills.

The Revenue first enlisted the help of external agencies in 2009 in response to increasing pressure to maximise its tax yield. Its reliance on these companies reached a peak in 2013, when it spent £14.8 million.

This spend dropped to £6.8 million last year, something that is likely to please both experts and taxpayers alike. Commentators have long questioned the wisdom of HMRC’s reliance on such firms, fearing a breakdown in communication could lead to individuals being pursed on the basis of out-of-date information.

Mark Giddens, head of private client services at UHY Hacker Young, said: “HMRC needs to be absolutely certain that they are correct when employing these sorts 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.”

HMRC is no stranger to controversy when it comes to its debt collection tactics. The Revenue sparked outrage when it announced its new direct recovery of debt (DRD) plans – a policy that would enable it to take unpaid tax directly from people’s bank accounts without first approaching a court.

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