HMRC use debt collection agencies to pursue taxpayers for unpaid taxes.
Why do HMRC use Debt Collection Agencies?
Over the past few years, HMRC have increased their focus on reducing the amount of unpaid taxes outstanding each year. Using debt collection agencies is one of the ways that they are doing this. HMRC started using debt collection agencies in 2009 and using them is one of the ways in which HMRC can and will pursue an unpaid debt.
Which Debt Collection Agencies do HMRC Use?
The debt collection agencies used by HMRC are:
◦ 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
◦ Past Due Credit Solutions (PDCS)
◦ Rossendales Ltd
◦ Walker Love
HMRC Notification Prior to Appointing a Debt Collection Agency
If your company has not paid taxes due to HMRC, HMRC will start a process to pursue the unpaid debt. Generally, they will not appoint a debt collection agency until late in this process so you will have plenty of notice prior to the debt collection agency being appointed. Additionally, HMRC will send a letter stating that they are appointing a debt collection agency before actually doing so.
You should be aware that appointing a debt collection agency is not the only way in which HMRC pursue unpaid taxes: they have powers to collect debts direct from bank accounts (although this is in very restricted circumstances), or can send bailiffs to seize company goods to be auctioned off with the proceeds applied to the outstanding amount. HMRC will pursue any unpaid tax debts, so it is very important that you do not ignore the situation.
How Can You Prevent HMRC Appointing a Debt Collection Agency for Unpaid Company Taxes?
As with any situation where a company is having problems meeting its tax obligations with HMRC, we advise that you communicate with the Revenue and try to agree a Time to Pay Arrangement with them. They are much more likely to agree an arrangement if you communicate with them and help them to understand the issue. If you don’t feel comfortable negotiating directly with HMRC, we are always happy to do so on the company’s behalf.
What can the Debt Collection Agencies do?
Debt collection agencies are not the same as bailiffs and have limited powers when it comes to pursuing the debt. For example, debt collection agencies are not allowed to force their way onto company or personal premises and can only enter when invited. Debt collection agencies also cannot seize goods from the property once they are inside.
Please note that HMRC do have a wider range of powers, so it may be that they take some of these actions directly.
If HMRC are threatening to appoint a debt collection agency for unpaid taxes, you should take it very seriously. Communicate with HMRC and try to agree a Time to Pay Arrangement to allow the repayment of the debt over an extended period of time. We are happy to help you with this process, or to advise in situations where a collection agency has been appointed – simply call us on 020 8444 2000.
Written by: Simon Renshaw