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Record high £498m collected by HMRC’s private debt collectors – up 20% in a year

Article featured in: the Sunday Times, the Telegraph, The i

HMRC tax debts collected by private sector debt collectors have reached a record high of £498m in the year to March 2022, a 20% increase on the £414m collected in the previous year, show figures revealed by HMRC to UHY Hacker Young, the national accountancy group. 
Following a reduction in debt collection activity (partly to protect financially vulnerable taxpayers) during the pandemic, HMRC has redoubled its efforts to collect overdue taxes. The amount of overdue tax now ready for debt collection has reached £40.3bn*, up 24% from £32.5bn a year earlier.

Neela Chauhan, Partner at UHY Hacker Young, says that concerns are mounting over the effects a surge in use of private sector debt collection agencies could have on some taxpayers. More aggressive debt collection by private sector agencies could place even more strain on household budgets and would affect those that have already been hit hardest by the cost-of-living crisis.

There are also fears that private sector debt collectors may not be incentivised to take sufficient care of taxpayers in financial difficulties, as they are more likely to get repeat business from HMRC if they are able to collect high levels of unpaid tax.

Says Neela Chauhan: “The expansion in the use of debt collection agencies is a worrying sign as it suggests a more aggressive stance from HMRC. The rise in interest rates means a lot of taxpayers are really struggling making it odd timing to put the squeeze on them.”

“It is understandable that HMRC is keen to tackle the growing problem of unpaid tax. However, sending debt collectors after people isn’t always going to be the most appropriate solution if they are struggling.”

“Many will question whether a private sector debt collection agency is inclined to be lenient with taxpayers in severe financial difficulties.”

“Taxpayers who do get into difficulty with their tax debts also need to be aware of the option they have of requesting a ‘Time To Pay’ arrangement that can allow them to catch up on their unpaid taxes over a longer period.”

There were 731,000 taxpayers in ‘Time To Pay’ arrangements with HMRC at the end of 2022*.


 * Year end December 31 2022. Source: HMRC


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