HMRC takes new measures to toughen stance on debt recovery

7 February, 2019

HM Revenue and Customs (HMRC) has toughened its stance on debt recovery, by taking money owed to them directly from hundreds of pay packets during the last financial year.

In data obtained via a Freedom of Information request, it was revealed that HMRC used attachment of earning orders against 428 people during the 2017/18 financial year.

An attachment of earnings order is a method of debt recovery, granted by a court, which works out the minimum amount of money a debtor needs to live on and deducts the sum owed from the money earned above this amount.

Experts believe that these orders are favoured by HMRC because it means that the individual cannot reduce payments if they are short of money one month and they are considered similar to the process of physically seizing assets to then sell at auctions.

Although seen by some as one of the most aggressive tools HMRC has at its disposal, the increase in people failing to pay debts is beginning to justify the use of the tactic.

Data has revealed that HMRC’s spending on private sector debt collectors rose by 62 per cent to £39 million in 2017, up from £24 million in 2016, a move that has been attributed to the government department becoming “increasingly impatient” over chasing outstanding debts.

An HMRC spokesperson said: “All of HMRC’s powers are given to us by Parliament and are subject to appropriate checks and balances.

“Enforcement action is only ever considered as a last resort, we will always attempt to engage in discussion regarding payment, and when appropriate agree on reasonable offers of payment over a longer period of time-based on individual circumstances.”