HMRC spending on debt collectors up by more than 500% in three years

2017 figure of £39.1m suggests it may be stepping up pressure on those who cannot pay tax bills


The amount HMRC pays to private-sector debt collectors has risen by more than 500% in three years, suggesting it may be stepping up the pressure on people who cannot pay their tax bills.

The figure rose to £39.1m in 2017, which was 62% higher than the £24.1m that HMRC spent on these services in 2016, 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 – and its strategy may be working: 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.

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”.

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The UK’s “tax gap” – the difference between the amount of tax that should be paid and how much is actually collected – was estimated to be £34bn in 2015-16, HMRC said last October. Individual consumers accounted for £3.6bn of this.

An HMRC spokesman said it had used debt collection agencies for a number of years as an “effective and efficient” way to collect tax.

He added: “They operate under strict codes of conduct to pursue debt and we expect them to uphold those codes at all times.

“Where someone thinks they will have problems paying the amount due, they should get in touch straight away. All requests for further time to pay an amount due are considered individually based on the facts of the case.”