Do HMRC Use Debt Collectors?

In short:

• HMRC have a number of methods to chase up unpaid bills, and the use of debt collectiors is just one of them.
• Businesses should be wary of scam companies claiming to have been appointed by HMRC.
• There may be payment options available to businesses struggling to cover HMRC debt.

We occasionally hear from business owners asking if HMRC use debt collectors after they’ve received a notice to collect unpaid taxes. While there are some unscrupulous companies that will try this on a fraudulent basis, there are indeed several debt collection agencies that HMRC can appoint should they need to.

The government have been quite vocal recently in their intentions to bolster the powers that HMRC have in identifying and chasing unpaid taxes, but HMRC have actually been using debt collectors since 2009.

If you’ve received a letter from HMRC or a debt collection agency, it’s best to act right away to avoid the situation spiralling. Below are a few of the most common questions we’re asked, as well as some useful tips to ensure you don’t find yourself on the wrong side of these agencies.

Do HMRC use debt collectors?

Yes. When chasing unpaid tax bills, HMRC often appoint debt collection agencies if they have no luck pursuing the debt by themselves first.

They can even use bailiffs, close businesses, or take money directly from bank accounts in some cases.

Fortunately, companies are generally given a good deal of time before any debt collection is passed over to a third party.

What is HMRC’s procedure for chasing up debt?

This can change from case to case, but as a general rule, the following procedure would apply.

1. Once HMRC have noticed an overdue amount on your account, they’ll get in touch via letter or phone call to let business owners know.
2. After several letters, HMRC will send their Final Opportunity Letter. While there is still scope to pay the bill beyond this, it does mark the final opportunity to pay before a third party is drafted in.
3. If no payment has been forthcoming, a debt collection agency is then appointed. Directors can expect to receive letters and phone calls from these rather than HMRC at this point.
4. Without any resolution by this point, HMRC can ocassionally move to send in enforcement officers. These are practically bailiffs employed by HMRC, though third-party contractors are sometimes brought in as bailiffs too. These may attempt to demand payment or seize assets.
5. If, by this point, there have still been no attempts to pay the debt, HMRC can issue a winding-up petition that will usually force the company into liquidation, and ultimately closure.

Do HMRC use Advantis or Moorcroft debt collection?

HMRC use both Advantis and Moorcroft, along with many other debt collection agencies from a list of approved partners.

Which debt collection agencies do HMRC use?

HMRC use a number of different agencies, and while there is some disagreement online as to who they might be, the list below includes both all those that are currently and have previously been used by them.

• 1^st Locate (trading as LCS)
• Advantis Credit Ltd.
• Apex Credit Management
• Ardent Credit Services (trading as Debt & Revenue Services or DRS)
• Bluestone Consumer Finance Ltd. (trading as Bluestone Credit Management)
• BPO Collections Ltd.
• CCS Collect (Commercial Collection Services Ltd.)
• Drydensfairfax Solicitors
• Frederickson International Ltd.
• Marston Holdings (formerly Rossendales)
• Moorcroft Debt Recovery Ltd.
• Oriel Collections Ltd.
• Pastdue Credit Solutions (PDCS)
• Responsecall/Scotcall (formerly Fidélité Credit Management)
• Walker Love

What powers do debt collection agencies have?

There’s a distinction to be had between the debt collection agencies that HMRC hire, and their enforcement officers. The debt collection agencies will typically just chase up debts by writing letters, sending SMS messages, and making phone calls.

They are not allowed to enter properties without invitation and don’t have the authority to seize assets.

However, receiving notice from a debt collection agency is still no small matter. Without resolution, the matter can soon escalate into the forced closure of the business.

Does HMRC send bailiffs?

Yes, occasionally. If HMRC can’t resolve an unpaid bill by sending letters or hiring a debt collection agency, and suspects that the business has assets that can cover the bill, they may send their own enforcement officers or third-party bailiffs to seize assets from debtors.

If you’re unsure that the collector or officer that visits you is actually working on behalf of HMRC, you can verify this by following the steps in HMRC’s guide.

What happens if you don’t pay HMRC debt?

Usually, HMRC will issue a winding-up petition that forcibly closes the company down. On some occasions, they may even send field agents or bailiffs that have the power to seize assets.

What options do businesses have when they can’t pay HMRC?

“The very nature of HMRC bills make them difficult to pay” remarks Forbes Burton’s HMRC Negotiator, Nicholas Troth. “Because the bills can arrive in one large amount, rather than spread out over several months, they can often take business owners by surprise”.

Troth specialises in negotiating with HMRC to make companies’ tax bills more manageable by spreading out the payment.

“I’ve seen so many UK businesses needlessly closed down due to inability to pay large tax bills. What many don’t realise though, is that there are ways in which those monolithic bills can be spread out over several months to the point where they become manageable again.

“Directors are best to contact us as soon as they realise they might have an issue with paying an HMRC bill. As you might expect, HMRC would always prefer to receive the money owed to them rather than close businesses down. As such, while HMRC can make it difficult to arrange payment plans, it’s certainly an option, and we’re proud at Forbes Burton to have a great success rate of securing Time to Pay arrangements for companies that would have otherwise folded”.

Don’t allow HMRC debt to escalate

With so much at stake, directors can’t afford to simply stand by when receiving an insurmountable tax bill. Action needs to be taken as soon as possible to prevent HMRC from closing down businesses and hiring debt collection agencies.

All it takes is one call to a professional business recovery specialist, such as ourselves to get the wheels in motion to secure a realistic payment plan.

Speak to a specialist adviser now on 0800 060 8446, or email advice@forbesburton.com for a free consultation with no obligation to see how we can help.