The HMRC has increased its spend on private sector debt collectors by 62% in the last year to £39m in 2017, up from £24m in 2016, says UHY Hacker Young, the national accountancy group.
UHY Hacker Young says that the steep rise in spending on private sector debt collectors could suggest that HMRC may be stepping up the pressure on people who can’t pay their tax bills as it continues its dash for cash. Some commentators have raised concerns over HMRC’s increased outsourcing of private sector debt collectors, as HMRC has little day-to-day control over and whose attitude towards debt collecting could be seen as more aggressive than that of HMRC.
UHY Hacker Young says that there can sometimes be a lack of effective communication between HMRC and their private sector debt collectors. As a result, some debt collectors have chased debts that have already been paid to HMRC or that HMRC has never been in contact with the taxpayer about. UHY Hacker Young adds that private sector debt collectors naturally look to maximise returns when working for HMRC. By doing so, 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.
However, UHY Hacker Young says that many debtors actually cannot afford to pay their tax bills on time, so they are not wilfully ignoring their debts. As a result, strict methods used by private sector debt collectors may not be the fairest approach.
Mark Giddens, Head of Private Client tax at UHY Hacker Young, comments: “HMRC is under increasingly heavy pressure to ramp up its tax take but must do its utmost to see that the public are not unnecessarily pestered. Private sector debt collectors have been accused in the past of taking a gloves-off approach. Some say that using private collectors is the wrong way to chase debtors, especially as many can’t – rather than won’t – pay their debts.”