Taxman’s debt collector spend surges by 500%
The taxman’s usage of external debt collectors to recover what he deems owed has soared by more than 500 percent, fresh figures show.
In fact, HM Revenue & Customs spent £39million on privately-run collection agencies in the last year for which records are available (2017), up from just £6.2m in 2014.
Such spending on third-party debt collectors -- notorious for “taking a gloves-off approach” to collect cash and maximise returns -- hit £12.5m in 2015. It then rose to £24m in 2016.
UHY Hacker Young, which obtained the figures, also said such a “steep” continual rise in HMRC’s spending on debt collectors suggests it may be increasing the pressure on those who cannot pay their tax bills.
But UHY partner Mark Giddens says many debtors actually cannot afford to pay their tax bills on time, so it is not a case that HMRC’s targets are “wilfully” ignoring their debts.
“Strict methods used by private sector debt collectors may not be the fairest approach,” the accountant said.
“HMRC are under increasingly heavy pressure to ramp up their tax take but must do its utmost to see that the public are not unnecessarily pestered.”
However, the department’s strategy seems to be paying off for the exchequer. In November 2017, the Treasury reported that the ‘tax gap’ had closed to become the smallest on record.
Experts at the time warned that one of the gap’s main contributors may be due to HMRC’s “increased zealousness”. And yesterday, the rise in debt collectors provoked another alert.
“HMRC have little day-to-day control over them and their attitude towards debt collecting”, Giddens said. “There is a possibility that these debt collectors could be seen as increasingly tough in their methods as they try to prove their value to HMRC.”