Source · Select Committees · Public Accounts Committee
Recommendation 2
2
Accepted
Establish clear, accessible route for taxpayers to report issues with HMRC debt collection agencies.
Conclusion
While we recognise the progress HMRC is making to tackle tax debt, we are concerned that it should have sufficient checks to protect taxpayers from being pursued too forcefully. HMRC says it has now worked through the debts created during the pandemic but still new tax debt is being created at record levels, driven by self-employed people and small businesses in financial difficulties. It is reassuring that HMRC appears to be staying on top of these new debts, with the debt balance expected to reduce slightly over the course of 2023–24. It is also positive that HMRC is driving more value from the external agencies it uses to collect debts, with the rate of return improving from £23:£1 to £32:£1. However, we have heard about cases where taxpayers are being pursued repeatedly for often trivial amounts. While HMRC should make every effort to recover its debts, this should be proportionate to the size of the debt and the circumstances of the taxpayer. We are not convinced that customers have an easily accessible and responsive route via which they can raise concerns about HMRC’s debt collection activities. Recommendation 2: HMRC should: a) establish a clear, easily accessible route for taxpayers to report issues they face when dealing with debt collection agencies working on behalf of HMRC; and b) report back to the Committee with a summary of any issues raised and how HMRC has dealt with them.
Government Response Summary
The government agrees and will update GOV.UK guidance to clarify how taxpayers can raise complaints about debt collection agencies. HMRC also commits to writing separately to the Committee with a summary of issues raised by these complaints.
Government Response
Accepted
HM Government
Accepted
The government agrees with the Committee’s recommendation. provide extra capacity. HMRC publishes information on the DCAs it uses and the activities they undertake on GOV.UK. At all times, DCAs collecting tax debts are acting for HMRC and are expected to meet standards of service set by the department. Taxpayers who have concerns about the service they receive from a HMRC DCA can raise a complaint with HMRC through the department’s established complaints procedure. HMRC will then recall the debt from the DCA while it considers the complaint. Separately, each DCA has in place its own complaints procedure and includes details on its website. Less than 0.1% of debts placed with DCAs generate a complaint. Though complaints about HMRC DCAs are very rare, HMRC is committed to ensuring guidance is as clear as possible and will update GOV.UK to provide more clarity about how taxpayers can raise a complaint to HMRC about a DCA’s handling of their case. In 2022-2023, HMRC's Debt Management service received 3,791 complaints, 167 (4%) of which related to cases handled by DCAs. For context, debt items sent to DCAs represented 6.5% of total debt items received in this period. 86% of the DCA related complaints were not upheld. HMRC will write separately to the Committee with a summary of the issues raised by these complaints.