HMRC has spent over £140 million on private debt collectors in the last decade, according to new analysis by UHY Hacker Young, the national accountancy group. UHY Hacker Young says HMRC has come under pressure to maximise revenues in recent years which has led to it adopting an increasingly aggressive approach to collecting unpaid tax.

The anslysis found that the HMRC has spent £26.3 million on private debt collectors in 2018 alone, up more than 300% from the £6.2 million five years ago. HMRC was given the power to use private debt collectors in 2009 and now employs ten different agencies.

The use of private debt collectors has been unpopular with many taxpayers who claim that their involvement worsens an already stressful situation.

UHY Hacker Young adds there has also been a number of examples of poor communication between HMRC and private debt collectors, which has led to debts being chased that have already been collected.

The use of private debt collectors is one of a range of tactics used by HMRC in the pursuit of unpaid tax that has raised concerns amongst taxpayers. The ‘loan charge’ introduced in April 2019 is seen as further evidence of HMRC’s increasingly heavy-handed approach to debt collection. The charge aims to collect unpaid taxes from contractors and other individuals that entered into tax planning schemes up to 20 years ago.

The ‘loan charge’ has resulted in many individuals facing huge tax bills and the possibility of bankruptcy – leading to some taking drastic action. A cross-party group MPs wrote to HMRC and HM Treasury asking them to review its introduction.

Mark Giddens, Head of Private Client Services at UHY Hacker Young, said “HMRC must look to strike the right balance between collection of tax and the welfare of taxpayers.”

“Private debt collectors are only necessary in a small number of cases. HMRC needs to ensure that external debt collectors are used as a last resort only.”

“The majority of taxpayers who owe tax are in that situation because they simply can’t afford to pay – workable debt restructuring options are more effective than relentless pressure from debt collectors.”

“HMRC has a duty to collect unpaid debts, yet there needs to be increased care taken when applying such high levels of pressure on taxpayers as in the case of the ‘long charge’. Ensuring the welfare of HMRC’s so-called ‘customers’ should be paramount.”

Commenting on the figures the HMRC said: “We sometimes use debt collection agencies (DCAs) to add to our capacity reclaiming debt, but we do not use private sector bailiffs.”

“Our advice to anyone struggling with debt is to get in touch so we can help them,” the spokesperson said. “HMRC is committed to providing extra support for vulnerable customers, including debtors.”

“We have specialist teams dealing with vulnerable customers who need extra support because they have difficulty resolving their enquiries through the standard HMRC contact channels. This includes a specialist team dealing with those vulnerable customers in debt.