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More debt collecting agencies are helping HMRC

More debt collecting agencies are helping HMRC

HMRC is increasingly turning to debt collection agencies in its bid to boost its take of outstanding tax and VAT. Furthermore, the Government department is also becoming more reliant on credit agencies as it tries to reduce fraud.

Public services lose £31 billion each year due to fraud and error, and losses due to tax mistakes account for nearly 20% of that total.

According to the Credit Services Association, debt collection agencies were employed to chase debt worth £58 billion last year in the UK. During the second half of 2011, the total value of debt held by members of the CSA increased by 11%.

Sara de Tute, the president of the CSA, said its not surprising that debts have increased since the credit crisis. However, the increase is also due to new private and public sector creditors who now see outsourcing their debts to professional agencies as a valid means of recovering vital funds.

Overdue debts cost the government between £7 billion and £8 billion every year and 95% of that debt is owed to HMRC and the Department of Work and Pensions. The government has now asked collection agencies to help it recoup some of those debts.

The Revenue has introduced a process for screening tax credit applications and this has saved it £50 million. The department is also developing Connect, a new system that will identify tax fraud and non-compliance. HMRC is also conducting more tax investigations and has increased the number of people it prosecutes each year to 1,000.

© 2012 All rights reserved. Reproduction in whole or in part without permission is prohibited.

Image: Debt Trap Vector Illustration by Vectorportal

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