26 March 2004
Debts owed to the Inland Revenue could be sold to private collection agencies, the National Audit Office has suggested.
The move is part of a package of proposals that would require new legislation, which the NAO suggests should be considered to reduce the £14bn that is owed by taxpayers. Some £219bn of tax is collected in total.
It also urged the Inland Revenue to explore techniques such as accepting payment by credit card, charging late payers for reminder letters and requiring companies with poor payment records to put tax deducted straight into special accounts.
Since 2003, the Revenue's call centre has accepted debit card payments, and local offices will also have that capacity by the middle of next year.
The report suggested that tax officers should also take up the scoring techniques used by credit card issuers to classify debtors, with appropriate recovery plans in place for each category.
The report, Recovery of debt by the Inland Revenue, published on March 24, found that debt collection had improved and that the systems used matched those of the best tax authorities worldwide.
The NAO praised the use of a telephone centre to make initial contact to recover debts.
Auditor general Sir John Bourn said: 'Much tax is collected quickly but at any one time there are billions of pounds outstanding, some of it long overdue. Faster recovery and preventing the build-up of debt could bring in money which could be used to improve public services.'
Of the £14bn outstanding, £3bn is more than a year overdue. Most people pay their taxes on time, but many get into arrears because of financial difficulties or unwillingness to pay, the NAO said.
'The longer a debt is outstanding, the harder it becomes to collect,' the report pointed out.
The idea of selling debts to collection agencies has never been pursued by the Inland Revenue because of confidentiality issues and data protection regulations.
However, the NAO noted that tax authorities in the US plan to outsource most debt collection to enable their staff to concentrate on high-value cases.
PFmar2004
