MPs urge Revenue to tackle debtors

Thursday, 25 November 2004 12:01 AM

An influential committee of MPs has called on the Inland Revenue to step up its efforts to collect unpaid tax and seek new powers to tackle errant debtors.

According to the Public Accounts Select Committee, a core of £700 million in unpaid taxes is written off each year by the Inland Revenue.

In addition, there is around £3 billion worth of debt that is over a year old.

The MPs suggest that the Inland Revenue should impose a surcharge on persistent late payers and oblige problem companies to pay tax and contributions they deduct from employees directly into a designated bank account.

A significant proportion of the debt write-off and outstanding debt is due to insolvencies, with much of the money owed in tax and contributions to the Inland Revenue having already been deducted by employers from the pay of their employees.

The chairman of the committee, Edward Leigh, said: "These are large sums to be tied up at any one time, or lost to the public purse altogether, when they could be paying for public services. It is vital that the Inland Revenue steps up its efforts to speed up debt recovery, through using other departments' records to trace those who owe tax, pursuing all debts owed by the same person at the same time, and seeking greater powers of recovery."

The MPs also call on the department to seek legal powers to require taxpayers to provide up-to-date contact details - as £55 million a year is written-off because the taxpayer can not be traced and £300 million of the year-old debt relates to contact problems.

The committee suggests the Revenue should look for additional powers for enforcing debts, including the power to recover debt directly from an individual's salary or from funds held by their bank without the need to go to court.

Though the court process is expensive, the organisation has been making increasing use of the legal system in debt recovery.

Various methods of improving debt collection are also suggested, including the idea that the Revenue should analyse the debt record of different categories of taxpayers and use risk scoring techniques to identify where early intervention is required.

A spokesman for the Inland Revenue told politics.co.uk that they welcomed the report, and that a full response would be issued through the Treasury in due course. Government departments normally issue a written response to select committee reports within eight weeks of publication.

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