HMRC hiring Private Debt Collection firms to collect overpayments

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HMRC hiring private debt collection firms

Private Debt Collection firms being hired

The HMRC is hiring private debt collection firms to recover owed monies from universal credit claimants.  Debt Collectors are being hired to chase overpayments from universal credit claimants. The government wants to reclaim the money, some of which goes back ten years.

According to a Sky News report, the government is cutting benefits to over one million people already struggling with rising living costs. Many claimants were not at fault or even aware of the overpayments. MPs and anti-poverty campaigners urged the government to halt deductions immediately.

1.3 million Brits see payments docked

Sky News obtained official figures showing that the HMRC is docking payments of 1.3 million universal credit recipients because of historical tax credit overpayments. The Department for Work and Pensions (DWP) reclaimed £373m from claimants on behalf of the HMRC.

Although the HMRC insists some of the overpayments stem from fraudulent activities, a large proportion is due to errors by officials.

The news broadcaster spoke to many claimants who confirmed paying back debts they didn’t know they owed. On contacting the HMRC, they struggled to obtain clear explanations or a breakdown of what they owed. Private debt collection agencies are now recouping payments from an estimated 29,000 people.

Sky News made contact with the HMRC in relation to two cases. One involved a woman who, through no fault of her own, owed over £2,000. After multiple attempts to obtain clarification, Sky News stepped in on the woman’s behalf, and the HMRC cancelled the debt.

In the second case, a computer glitch caused a woman to owe nearly £1,000, which the HMRC said she had to repay through a seven-year payment plan, insisting it was each citizen’s obligation to notify the agency of changes:

“Customers are required to tell us of any change in circumstances, and when they do, awards are recalculated and balanced across the remainder of the period. This means when a claim ceases during the financial year, in some instances, an overpayment may be due.”

Official HMRC report misleading

Although the official HMRC report suggests that most overpayments were due to fraud, poor advice over the phone from officials may also have led to a significant number of overpayments, charities revealed. At a time when people are already struggling to make ends meet, the system was driving people into poverty; campaigners pointed out.

Food bank Trussell Trust told Sky News that most of its visitors owed the government money. MPs from all parties implored the government to pause debt collection until after the end of the cost of living crisis.

Work and pensions select committee chair and Labour MP Sir Stephen Timms said:

“People are completely unaware of these debts when suddenly money starts getting taken out of their Universal Credit monthly payments and, in a cost of living crisis with inflation running at current levels, that’s causing real hardship for people.

“So my select a committee, which is an all-party committee with a Conservative majority, recommended that the government should pause these deductions while inflation is running at its current level.

“Unfortunately, the government rejected that recommendation, but I think that would be very helpful just to support people through this really, really difficult time.”

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