Currently, HMRC maintains contracts with 13 commercial debt collections agencies (DCA’s) to collect tax debts on their behalf.
While HMRC continues to target and collect larger liabilities themselves, the majority of their debt collection is now outsourced. These DCA’s, it’s important to note, are only paid for the amount they’ve collected which means they have a strong incentive to be persistent.
HMRC have a duty to notify you if they have appointed one of these. If you have received a Final Opportunity Letter and either failed to contact HMRC or not paid them, you should expect a notification of debt enforcement letter (giving you 14 days to pay) sent to your registered company address. Following this, the case will be handed over to a DCA, who will contact you separately.
Although there are exceptions DCAs target Sole Traders and Partnerships rather than limited companies.
In all cases, you should request formal proof of instruction when a debt collector appears at your place of business. There have been numerous reports of HMRC’s 3rd party agencies either exceeding their remit or attempting recovery based on outdated information so, if the demands are at odds with your expectations, you should contact HMRC immediately. Equally, feel free to contact one of our team for advice on your situation – we’re one of the UK’s most practised mediators with HMRC, with four decades experience to call on.
What is the remit of these external HMRC Debt Collection Agencies
Commercial debt collection agencies are instructed by HMRC on a case by case basis, which means they have a specific remit to the collection a particular type of debt, relevant to a particular type of tax. They will have minimal knowledge of any points of tax law, so there’s no point even asking them about this. They are instructed to simply collect the tax, via the correct legal protocol.
What are the powers of external HMRC debt collection agencies?
It’s important to understand that, in most cases, DCAs are not authorised to make face-to-face visits, remove goods, or initiate legal proceedings, so if any of these things has occurred you should report them to HMRC immediately on 0300 200 3862. Their only powers extend to writing letters or making telephone calls to taxpayers ‘temporarily assigned ’to them by HMRC.
The two exceptions to that rule are if you have self-assessment or VAT debt and don’t respond to contact from a DCA. In these instances, agents from either Rossendales Ltd or Fidélité Credit Management are permitted to visit you to collect your debt in person.
What code of conduct should HMRC’s debt collection agencies abide by?
As per their statement in a parliamentary review here, HMRC state: ‘We require the DCAs to comply with strict codes of conduct and the contracts we have with them require that they maintain HMRC standards concerning customer service, security and professionalism. A robust audit and assurance process is in place.’
When do HMRC’s agents come to collect debts?
When HMRC decide to undertake what is called ‘distraint’, which means forcible possession of goods, they will send members of their ‘field force’ to carry this out. At the first point of contact, the field force agent will likely be checking your address and assessing whether matters can be sorted out without enforcement. Unlike external debt collection agency officers, these field force agents should be well informed about your tax position, or at the very least with the means to check information for you there and then. As with external DCA’s, these offices do not have the right to force entry into your premises unless they are specifically carrying a court order.
Can I still negotiate a Time to Pay Agreement once I’ve received a Notice of Enforcement?
The law precludes the possibility of a time to pay arrangement once the Notice of Enforcement Letter has been issued.
Are the fees to pay around HMRC debt collection?
HMRC now charges any defaulter £75 for the issue of a Notice of Enforcement. Where goods enforcement action (Distraint) follows, you will incur a charge of £235 (plus 7.5% of the debt over £1500) even if you settle your debt immediately.