Debt collectors to help collect tax

HM Revenue and Customs (HMRC) have outsourced tax collection for the first time by signing up four firms of debt collectors.

The decision has been made to use debt collectors to collect an extra £140m of tax owed for this year, but there are fears that heavy-handed tactics could be used and taxpayers details going astray.

However, a trial scheme proved successful, with the "significant" recovery rates outweighing the operational costs.

Nick Lodge, director of debt management at HMRC adds that debt collection agencies give them "vital additional capacity".

People who are worried about meeting their tax bills and don't want debt collectors knocking on their door may want to consider a debt management scheme. This could help restructure the amount owed and keep creditors at bay.

Kevin Still, director of Atlantic Financial Management, says: "Dealing with overdue HMRC debts can be complex and the placement of debts to 3rd party debt collection agencies is generally very crude with very little of the account history passed across with the debt.

"This means that disputed debts or those with existing payment arrangements often become more fraught with problems as the case needs to be constantly referred back to the HMRC debt management unit."

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