HMRC ramping up spending on private debt collectors, new analysis shows

HM Revenue & Customs (HMRC) has spent £90m on private debt collectors in the last three years, compared to £34m in the three years before that, according to new analysis.

Read more: Public will be able to make digital HMRC complaints from August

The UK tax agency spent £26m on private debt collectors in 2018 alone, compared to £6m five years earlier, accountancy group UHY Hacker Young revealed today. The 2018 figure marks a decrease from the £39m spent in 2017, however.

HMRC was handed the power to use private companies to collect debts in 2009 and currently uses 10 such firms. The private agencies write to those in arrears and debtors are expected to send them the money.

UHY Hacker Young has raised concerns about the government’s use of private debt collectors, saying it has adopted an “increasingly aggressive approach”. It said there have been cases where debts have been chased that have already been collected.

The new analysis comes after HMRC was criticised earlier this month for its “loan charge”, which will see at least 50,000 firms who avoided tax pay it on up to 20 years of income in a single year. Former Treasury minister Justine Greening called the measure “punitive rather than proportionate”.

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.”

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

An HMRC spokesperson 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.”

Read more: HMRC has warned young adults to be wary of tax rebate scams

The spokesperson said: “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.”