HMRC has been rated as the worst organisation for debt collection in a league table of best practice published by Citizens Advice.
The league table was included in a report – The State of Debt Collection – which said the charity’s advisers had found HMRC to be inflexible when collecting overpayments of tax credits.
Only 12 percent of the charity’s advisers thought HMRC almost always set affordable payments for tax credit collection, compared to 51 percent for debt collection agencies (DCAs) and banks.
HMRC also came out worst overall with an approval rate among advisers (for tax credit collection) of 34 percent.
Advisers had major concerns over the difficulties people face when trying to contact departments. HMRC scored particularly badly with 56 percent of advisers saying they “rarely or never” get through to someone who can help – this compared to just five percent for DCAs.
Some 48 percent of advisers reported that HMRC tax credit collections staff were rarely or never co-operative. This was 45 per cent for magistrates’ courts collections – compared to just nine percent for high street banks.
To create a league table for debt collection, Citizens Advice compared how central government departments collected debt with water companies, DCAs and other firms in the private sector.
The charity found in government departments evidence of poor practice, including public bodies asking people to pay money while a debt was being disputed, and very old debts being collected when proof of the debt was not made available.
Some government departments also collected very old debts; one person that turned to Citizens Advice was chased by the DWP for overpayment of a benefit in 1989.
Researchers also found aggressive enforcement being used against debtors who had outstanding benefits claims that could settle a debt and an “inflexible attitude to people who need time to take advice, or make payments.”
The study took a particular focus on government debt problems most commonly raised – council tax arrears, tax credits overpayments, benefits overpayments and magistrates court fines.
Gillian Guy, chief executive of Citizens Advice, said: “Fair debt collection practices are fundamental to any functioning economy.
“Of course people must repay government debts as soon as they can, but there is a difference between people who can’t pay and won’t pay. Our evidence shows glaring inconsistencies in how some government departments and private companies go about recovering money.
She added: “It’s unacceptable that government agencies are behind the standards set for private companies when recovering debt. National government, private firms, utility providers and debt advice specialists need to get together and urgently agree a fair and consistent way forward.”
A HMRC spokesperson said: “We work hard to ensure claimants receive the right tax credit payments and when someone receives more than they are entitled to we aim to come to a payment arrangement so the debt can be reduced in a fair and manageable.”
For the league table, some 259 of Citizens Advice’s debt specialists from all over the country rated government departments and companies against seven factors, including how creditors resolve disputes, set affordable repayment plans and how easy they are to contact.
The table is published in the January edition of Credit Today magazine – see page eight. HMRC’s full response will be published in the February edition.
By Marcel LeGouais