HMRC has halved its spend on debt collection agencies (DCAs) during the past year, with £6.8m spent on them in 2014 compared to £14.8m in 2013, according to new research.
The study by chartered accountants UHY Hacker Young tracks HMRC’s usage of DCAs, since it started outsourcing tax collection to external agencies in 2009.
The accountancy firm said HMRC’s use of these agencies reached a record high in 2013.
Mark Giddens, head of private client services at UHY Hacker Young, said his clients are sometimes on the receiving end of miscommunication from the tax authority to its external suppliers.
He added: “There are often issues regarding communication within HMRC; when an outside agency is involved as well there is a significant risk of action being taken on the basis of incorrect or out-of-date information.”
“The situation for most taxpayers who are behind on tax bills is that they just cannot afford to pay, rather than that they are holding money back from HMRC.
“The tax authority is high up the list of creditors that taxpayers want to pay first.”
Giddens raised a concern that there’s no guarantee that HMRC’s databases are exactly up to date.
He added: “The danger is that if errors are made then taxpayers are left out of pocket and fighting for their own money against a government agency.”
Giddens also pointed out that HMRC has already received controversial powers to demand that disputed tax be paid to it up front.
It is also pursuing powers to take unpaid tax directly from people’s bank accounts.
By Marcel LeGouais