HMRC and public sector to increase debt recovery activity

Many small to medium businesses (SME’s) from all over the UK have recently found themselves pursued by HMRC collectors following a recent slip-up, thought to have originated in their database systems.

A recent legal relaxation for small businesses whose payments fall below a threshold of £1,500 per month – but who pay their PAYE and national insurance to HM Revenue & Customs (HMRC) on a quarterly basis (instead of monthly) have been  contacted by debt collectors a month before their latest quarterly payment was due.

HMRC were believed to have been contacted on a number of occasions and were reportedly told that demands for unpaid PAYE and national insurance for months four and five – (i.e July and August) had in fact gone out to small to medium businesses and furthermore, that the client had been wrongly caught up in the error.

It was announced in July that HMRC would start to use debt collection agencies in 2010-2011 in a bid to collect an extra £140 million in tax, although HMRC said it would only refer a case to an agency after writing to the debtor.

With the governments austerity measures gathering pace, tax hikes and spending cuts are deemed far less palatable by the public if so much revenue is lost to public sector waste and tax avoidance. With £1bn of UK tax debt being contracted out to UK debt collection and commercial debt recovery agencies over the next 12 months, perhaps a little less burden will be placed at the taxpayer’s door with the public sector only getting what is owed to it.

The Comprehensive Spending Review presents a real opportunity for the public sector to increase its debt recovery through the use of private sector debt recovery / collection firms and it is widely accepted that the private sector will not only have to create new businesses and jobs to secure the future of the economy, but also provide solutions to the efficiency drives required in the public sector.

If you are a UK business and wish to find out more about how our services such as Outsourced Credit Control, Debt Recovery and Debtor Tracing can help you get in touch for a no obligation discussion, or submit details of a commercial debt you wish chase, via our Client Instruction page.