Ruth Mitchell

Debt recovery scheme extended by HMRC

HM Revenue and Customs has appointed 10 debt collection agencies to recover £1 billion in outstanding debts.

HMRC announced plans to use private debt collection schemes in June 2010, after the success of a pilot scheme to boost HRMC’s debt collection capacity and to help recover lower value debts.

The scheme was so successful, it has now been extended and HRMC hopes the newly delegated DCAs will attempt to collect an extra £140 million in tax.

Graham Purvis from Robson Laidler said:

“The pilot scheme employed 4 debt collection agencies and, together with a far tougher stance on liquidating companies and bankrupting individuals for non-payment of tax debts, proved to be such a success that HMRC decided to extend the number of debt collectors.

“More than 40 debt collection companies tendered for the business, worth up to £70 million in fees. The successful 10 agencies will enter a two-year arrangement with HMRC”.

However, some experts believe that the extension of the scheme could leave businesses facing unbudgeted for costs and liquidation, while vulnerable people could be subjected to disproportionate harassment.

It is understood that DCAs will continue to collect relatively small and older outstanding debts, and cases will only be referred to DCAs after a last chance to pay has been offered in writing.

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