Figures released from Accounts firm UHY Hacker Young shows the HMRC had doubled its spend on Private Debt Collection services in the year 2016.
HM Revenues and Customs (HMRC) forked out over £24m for Debt Collection in 2016 compared with a £12.5m spend in 2015.
In 2014 it was a mere £6m which would indicate there has been a significant use of Debt Collection Agencies from the private sector by the HMRC.
The Accountancy firm noted that the utilisation of Debt Collection Agencies was proving to be a more cost effective way of chasing unpaid taxes but was aware that it has its critics.
Some critics have cited it as being a ‘heavy handed’ and ‘aggressive’ approach to recovering outstanding taxes and is unfair when a person cannot repay the amount owing and has not had the time to deal with contact from the taxman in the first place.
“HMRC is under pressure to constantly drive up tax take and collect as much as possible, but it does need to be careful to ensure that the taxpayer does not suffer as a result of efforts to do this,” commented Mark Giddens, head of private client tax at UHY Hacker Young.
“Too many debt collection cases relate to HMRC errors or concern vulnerable individuals. The use of third party agencies makes it that much more difficult to resolve issues and protect those who are simply unable to manage their tax affairs.”
A spokesperson for the HMRC said: “We use debt collection agencies operating under strict codes of conduct to pursue debt, and we expect them to uphold those codes at all times.”
The HMRC’s use of Debt Collection Agencies raised a few eyebrows when it was first announced by the Government as a way to improve the amount recovered from people owing tax.
The amount of which the tax office is spending on Private Debt Collectors is increasing which could indicate it has been viewed as a success by Senior Civil servants.