HMRC is set to review its debt collector pilot scheme after concerns were raised that many of the agents and revenue staff are following up on tax demands that were issued by mistake. On following up this ‘spurious’ tax debt, it usually transpires that the penalty notices for non filing of tax returns have been issued to companies that are no longer trading or who do not employ any staff.

A source who spoke to the Mail on Sunday suggested that these ‘false’ debts could account for up to 10% of the £21.5 billion of taxes that are currently being chased by HMRC.

President of the Chartered Institute of Taxation, Andrew Hubbard was present at a recent meeting of tax advisors to the government who were advising that improved record keeping was a priority to reduce the level of spurious debts. However, Hubbard declared that he was worried that withdrawing particular repayment allowances would lead to their increase.

He said, “It is clearly necessary that people should pay the tax they owe but given the high levels of uncertainty about the true level of debt and the system problems, these are obvious concerns.”

He continued, “To be fair, the Revenue is aware of the problems and is working to remedy them, but the systems ought to be sorted out before there is any outsourcing of debt collection.”

Minutes from the Administrative Burden Advisory Board states that the HMRC is “aware of the issues with private debt collectors”.

On 10th July, 310 banking and debt management staff from HMRC participated in a half day walkout as a protest against de-skilling and downgrading of their work.

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