HMRC use debt collectors!

Since June 2010, HMRC have increasingly been using external debt collection agencies (DCA) to provide additional resources to collect a greater number of debts - corporation tax excluded.

The use of DCAs and “Final Opportunity Letters” are evidence of an increasingly sophisticated approach called “targeted leverage activity”, where HMRC inter alia use psychological techniques to profile and engage taxpayers, with the eventual laudable aims of reducing tax debt and improving public finances.

Appointment of DCAs
The appointment of a DCA will be notified to the taxpayer, and is likely to occur after HMRC have issued a “Final Opportunity Letter” to certain taxpayers.

HMRC are currently employing 11 or so external DCAs on contracts of around 2 years.

DCA’s powers
DCAs will be assigned a specific debt to collect (i.e. combination of taxpayer, tax type, and year of assessment), and can only collect that debt.

  • Ask for confirmation of the debt, and what it includes i.e. Which tax? Which tax years? How much is fines?

DCAs should only have brief details of the cause of the specific debt they are collecting, and so are not able to discuss any technical tax point.

  • If the DCA pretends to know more, report them to HMRC on 0845 915 5348
  • You must contact your tax office (number on letter or use 0845 302 1427) if you are still in dispute about a technical point, and advise the DCA that the matter is still in dispute.

No matter what they say, DCAs ARE ABLE TO negotiate payment terms i.e. Time To Pay style arrangements, with the taxpayer, but at interest rate of up to 3% per anum

  • Insist on paying over a period of time, as you can afford to.

Don’t let DCA staff scare or bully you.
DCAs are NOT authorised to make face-to-face visits, remove goods, or initiate legal proceedings.

  • Be wary of legal threats.
  • Report inappropriately threatening letters.
  • Do not let them into your house.

DCAs only have the power to write letters or make calls to taxpayers “temporarily” assigned to them!

NB Face-to-face visits, distraint visits (removal of assets), and initiation of legal proceedings can only be executed by HMRC’s own internal “Field Force” officers – who have been known to arrive, unannounced, leather clad on motor bikes, in the early hours of a Sunday morning.

Contact us if you need help; 01753 840040;

Wisdom Da Costa, A* Accounting Services