HMRC are spending millions more on debt collectors.

HM Revenue & Customs (HMRC) has spent £90m on private debt collectors in the last three years, compared to £34m in the three years before that, according to new analysis.

In 2018 they spent £26 compared to only £6m five years earlier.  However, this is less than the £39m spent in 2017.

HMRC increase figure over several years.

According to the accountancy firm UHY Hacker Young, which obtained the data. The figure has increased annually for several years: it stood at £6.2m in 2014, then rose to £12.5m in 2015.

Using a private debt collection agency is one of several ways HMRC chases outstanding taxes. It has a relationship with 12 different agencies that can pursue debtors on its behalf.

In October 2017, HMRC declared that unpaid tax was at a “record low” as a result of a crackdown on avoidance, evasion and noncompliance.

However, the department has also come under fire for using debt collectors to pursue people whose tax credits were overpaid.

‘Dash for cash’  shows an “increasingly aggressive approach.”

UHY Hacker Young said the sharp rise in spending on private-sector debt collectors “could suggest HMRC may be stepping up the pressure on people who can’t pay their tax bills as it continues its dash for cash”.

It added that the taxman had little day-to-day control over these firms, whose attitude towards debt collecting “could be seen as more aggressive than that of HMRC”.

UHY Hacker Young raised concerns about the government’s use of private debt collectors, saying it has adopted an “increasingly aggressive approach”. It said there have been cases where debts have been chased that have already been collected.

HMRC criticised for “loan charge.”

The new analysis comes after HMRC was criticised earlier this month for its “loan charge”, which will see at least 50,000 firms who avoided tax pay it on up to 20 years of income in a single year.

Former Treasury minister Justine Greening called the measure “punitive rather than proportionate”.

Mark Giddens, head of private client services at UHY Hacker Young, said: “HMRC must look to strike the right balance between collection of tax and the welfare of taxpayers.”

“The majority of taxpayers who owe tax are in that situation because they simply can’t afford to pay,” he said. “Workable debt restructuring options are more effective than relentless pressure from debt collectors.”

An HMRC spokesperson said:

“We sometimes use debt collection agencies (DCAs) to add to our capacity reclaiming debt, but we do not use private sector bailiffs.”

“Our advice to anyone struggling with debt is to get in touch so we can help them.”

“HMRC is committed to providing extra support for vulnerable customers, including debtors.”

“We have specialist teams dealing with vulnerable customers who need extra support because they have difficulty resolving their enquiries through the standard HMRC contact channels. This includes a specialist team dealing with those vulnerable customers in debt.”

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