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Reviewed by
Chris Andersen
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Reviewed by Chris Andersen

Chris became an Insolvency Practitioner in 2014 and is currently regulated by the IPA.

He is experienced in contentious insolvency with excellent analytical skills and strong knowledge of both general and technical insolvency matters.

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13th October 2023

While HMRC primarily handles matters internally, there are instances in which third-party debt collectors may enter the equation.

This article aims to provide a comprehensive overview of the circumstances under which HMRC employs external debt collection agencies. We will delve into the regulatory framework governing this practice, the criteria HMRC uses to resort to this option, and your rights and responsibilities as a business owner.

Contents
  1. Will HMRC Use Debt Collectors to Recover Debts?
  2. Why HMRC Uses Debt Collection Agencies
  3. Which Debt Collection Agencies do HMRC Use?
  4. What Happens During an HMRC Debt Collectors Visit?
  5. What to do if you are threatened with HMRC debt enforcement action

Will HMRC Use Debt Collectors to Recover Debts?

Yes, HMRC does use third-party debt collectors in certain cases. This generally occurs when internal attempts to recover owed taxes have been unsuccessful.

HMRC’s primary method of debt recovery is through its own internal processes. These include sending reminders, setting up payment plans, and conducting investigations. However, when these steps fail to secure payment, HMRC may decide to engage a debt collection agency to act on its behalf.

It’s important for business owners to be aware of this possibility, as it adds an additional layer to the debt recovery process. These third-party agencies operate under strict guidelines set by HMRC, and they are authorised to collect various types of debts including Income Tax, Corporation Tax, and VAT.

Understanding that HMRC can and does use external agencies for debt collection enables you to be better prepared in case your business finds itself in such a situation.

Why HMRC Uses Debt Collection Agencies

Since 2009, HMRC has been enlisting a rota of debt collection agencies to help it recover unpaid taxes. While the practice, has been somewhat controversial, there’s no sign that this will cease in the near future.

All third-party agencies authorised are are regulated by the Financial Conduct Authority and must follow HMRC processes and guidance at all times.

In particular, they are forbidden from visiting you at your home or place of work.

The agencies have the simple remit of collecting what is owed, or referring the matter back to HMRC.

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 advise that you should pay the agency directly rather than them. You should check 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 Collectors Visit?

If you have a debt to HMRC and have not paid it, they may send a debt collector to visit you at your home or business address. This is a last resort, and HMRC will only do this if they have tried to contact you in other ways and you have not responded.

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.

If you are unable to pay your debt in full, a TTP arrangement will allow you to repay it in monthly instalments over a period of time, typically 12 months. HMRC will consider your financial circumstances when setting up a TTP arrangement.

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.

What to do if you are threatened with HMRC debt enforcement action

If you’re threatened with HMRC debt enforcement action, acting quickly is essential to avoid further complications. Here are the steps you can follow:

  • Contact HMRC right away: Discuss your situation with them. They might pause the enforcement action while you sort things out.
  • Be honest about your financial circumstances: This transparency will assist HMRC in directing you toward an appropriate solution.
  • Inquire about a Time to Pay (TTP) arrangement: This allows you to break down the debt into monthly instalments, usually over a span of 12 months.
  • If you can’t pay anything right now: Ask HMRC if they can temporarily hold off on your debt until your financial situation improves.

Expert Advice

If your business is facing the prospect of debt recovery actions from HMRC, it is crucial to consult an insolvency expert 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.