Source · Select Committees · Public Accounts Committee
Recommendation 8
8
Accepted
HMRC's pursuit of small debts coexists with rising revenue losses from uncollectible liabilities.
Conclusion
We have received written evidence that HMRC repeatedly pursues small debts over a number of years.24 We asked HMRC whether this was disproportionate to the size of the debt. HMRC told us it takes a risk-based approach to debt management and will pursue even small debts if it is cost-effective to do so. It said that small debts will stay on a taxpayer’s record and HMRC will periodically contact taxpayers for payment.25 Each year HMRC judges particular debts as no longer worth pursuing, either because there are no practical means of pursuing that debt or because it is not worthwhile on value-for- money or hardship grounds. In 2022–23 these revenue losses totalled £3.8 billion, up from £2.4 billion in 2021–22.26 HMRC told us it expects these losses to continue to increase as HMRC progresses with clearing its debt balance.27 Address registration
Government Response Summary
The government agrees and will update GOV.UK by September 2024 to provide clearer guidance on how taxpayers can raise complaints to HMRC regarding the handling of their cases by Debt Collection Agencies.
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.