How Does HMRC Debt Collection Work?

HMRC’s Debt Collection Process Explained

Her Majesty’s Revenue and Customs (HMRC) plays a crucial role in collecting taxes that fund public services in the UK. When businesses fail to meet its tax obligations, HMRC follows a structured approach to collect the owed taxes. The process typically starts with threatening letters sent to the company to settle outstanding debts, such as VAT, corporation tax, or PAYE.

If these initial reminders are ignored, HMRC escalates their efforts by issuing a ‘final opportunity letter.’ This communication serves as a last reminder before HMRC takes more stringent collection actions.

HMRC’s Use of Third-Party Agencies

Since 2009, HMRC has been enlisting a rota of debt collection agencies to help it recover unpaid taxes. All third-party agencies authorised are regulated by the Financial Conduct Authority and must follow HMRC processes and guidance at all times.

The agencies’ simple remit is to collect what is owed or refer the matter back to HMRC. They have the power to negotiate repayment plans, seize assets, or, in extreme cases, initiate court proceedings to recover the debts.

Keeping a calm and professional demeanour is key during all interactions. These agencies are regulated, ensuring they follow strict guidelines, so it’s important to remember you’re entitled to fair treatment and reasonable time to resolve your debts.

Which Debt Collection Agencies do HMRC Use?

HMRC use the following debt collection agencies:

• 1st Locate (trading as LCS)
• Advantis Credit Ltd
• Akinika Debt Recovery Ltd
• Apex Credit Management Ltd
• Bluestone Credit Management Ltd
• CCS Collect (also known as Commercial Collection Services Ltd)
• Drydensfairfax Solicitors
• Fidélité Credit Management
• Fredrickson International Ltd
• Moorcroft
• Past Due Credit Solutions (PDCS)
• Rossendales Ltd
• Walker Love

Once the debt has been passed to a collection agency, HMRC advises that you should pay the agency directly rather than them. You should check the details provided by the debt collection agency, such as the amount owed and contact HMRC if there is any dispute about these.

If you can show that the company cannot afford to pay the outstanding debt, the collection agencies may accept a plan to make payments via instalments, but they can be very aggressive, and it may be that you want help discussing this with them.

What Happens During an HMRC Debt Collector Visit?

When an HMRC debt collector visits you, they will:

• Show you their HMRC identification card, which will have their name, photograph and HMRC serial number on it.
• Ask you to confirm your identity.
• Discuss your debt with you and try to understand why you have not paid it.
• Offer you the opportunity to pay your debt in full or to set up a Time to Pay (TTP) arrangement.

A TTP arrangement allows businesses to pay their debt in instalments over a time period, typically up to 12 months, depending on the amount owed and the business’s current financial situation.

If you refuse to pay your debt or to set up a TTP arrangement, the debt collector may take further action, such as:

• Seizing your assets, such as your car or home.
• Making a deduction from your wages or benefits.
• Taking you to court.

HMRC debt collectors have a lot of power, but they are also trained to be reasonable and understanding. If you are struggling to pay your debt, it is important to be honest with them and to work with them to find a solution.

Concerned about HMRC Debt Collectors?

If your business is facing the prospect of debt recovery actions from HMRC, it is crucial to consult an insolvency expert such as ourselves to guide you through this complex process. As specialists in this field, we can provide tailored advice to help you navigate the regulatory intricacies and mitigate potential financial risks.

We know that the process can be stressful and are always happy to help. Call us on 0800 074 6757 or use the live chat in the lower right-hand corner.

FAQs on HMRC Debt Collection