Source · Select Committees · Public Accounts Committee
Recommendation 7
7
Accepted
Increased external agency use for debt recovery highlights serious issues with HMRC complaints procedures.
Conclusion
HMRC has recently increased its use of external agencies.18 In 2022–23 it spent £34.0 million on agencies to recover tax debt, up from £20.6 million in 2021–22.19 A new contract 9 Q 31 10 Q 83 11 Qq 84–85 12 Q 83 13 HMRCSR0007 Institute of Chartered Accountants in England and Wales; HMRCSR0009 Association of Taxation Technicians; HMRCSR0015 Chartered Institute of Taxation; HMRCSR0017 Low Incomes Tax Reform Group 14 Qq 87, 89–90 15 Q 37 16 C&AG’s Report, para 7 17 Qq 37, 38 18 Q 36 19 C&AG’s Report, para 1.14 10 HMRC performance in 2022–23 with these agencies from September 2022 means the rate of return that HMRC gets from this spending has improved, from £23 of debt recovered for every £1 spent to £32 for every £1 spent.20 HMRC said it has long-standing relationships with some of the agencies, which has allowed it to streamline the processes and help the agencies to be more effective. We asked HMRC about the accountability arrangements for these agencies. HMRC told us that they are all part of a Government framework and regulated by the Financial Conduct Authority and that HMRC agrees and oversees the letters and the processes that they follow.21 HMRC said that customers wishing to make a complaint about how they have been treated by an agency working on behalf of HMRC would do so through HMRC’s complaints procedures.22 However, we noted that in June 2023 the Adjudicator’s Office reported concerns with HMRC’s complaints procedures, with significant backlogs and increasing numbers of customers receiving no or little meaningful response from HMRC for long periods of time. HMRC said that the number of complaints has been increasing, mainly down to the time taken by HMRC to respond to queries, and that it is increasing its resources for complaints management.23
Government Response Summary
The government agrees with the observation and will update GOV.UK guidance by September 2024 to provide clearer information on how taxpayers can complain to HMRC about Debt Collection Agencies. HMRC will also provide the Committee with a separate summary of complaint issues.
Government Response
Accepted
HM Government
Accepted
2.1 The government agrees with the Committee’s recommendation. Target implementation date: September 2024 2.2 HMRC has been using private sector Debt Collection Agencies (DCAs) since 2009 to provide extra capacity. HMRC publishes information on the DCAs it uses and the activities they undertake on GOV.UK. 2.3 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. 2.4 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. 2.5 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.