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Taxman hires debt collection quartet

Contractors expected to recoup £140m a year

HMRC have hired four debt collection firms in an attempt to recoup extra millions of unpaid taxes.

The department launched a six-month pilot scheme last summer to test the impact of working with private sector debt collection agencies (DCAs). The trial was considered a success, and so it was announced in the June Budget that the Revenue would make full-time use of contractors to boost debt collection capacity and help the pursuit of lower value debts.

Agreements have been signed with Commercial Collection Services Ltd, Credit Solutions Ltd, Fairfax Solicitors Ltd and iQor Recovery ServiceHMRC's Nick Lodges Ltd, which will all operate under industry and HMRC standards. They are expected to raise an additional £140 million per annum in outstanding tax payments.

The news comes just days after the National Audit Office announced that the Revenue had improved its performance in collecting debt, with unpaid amounts due from taxpayers decreasing by £1.6 billion to £26.1 billion.

The department’s director of debt management and banking, Nick Lodge (pictured), said: ‘DCAs give HMRC vital additional capacity, strengthening our ability to pursue the debts of those who decline to pay.

‘We do understand that some businesses and individuals are not in a position to pay what they owe, and we have put procedures in place to help those who are genuinely struggling – but those who simply refuse to pay have to be pursued,' added Mr Lodge

Before a debt is referred to an external agency, the Revenue will write to the debtor to provide a final opportunity to pay or reach an agreement with the taxman.

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