Since 2009, HMRC has sent out approximately 17 million letters to taxpayers, including umbrella company contractors. Now it has emerged that around 2,000 people have complained about the threatening tone of HMRC’s debt recovery letters.
A Treasury Select Committee has been looking into the effectiveness of the Revenue and it has stated that the tone of HMRC’s tax debt recovery letters was not suitable for some taxpayers. In some instances, letters were sent to people who didn’t even owe any tax.
The TSC said the letters suggested immediate settlement was required and although they referred to potential consequences if settlement was not made, they did not state what these would be. The Select Committee went on to say that such language is only appropriate if there is proof of repeated and deliberate non-payment. It is entirely inappropriate in cases where there is a dispute over the amount owed, where the taxpayer concerned is vulnerable, or where there is a possibility that no tax is owed.
According to the government, HMRC adopted a new approach to the collection of overdue taxes in 2009/10 and these letters were introduced as part of that new system. It claims to have modelled the approach on best practice used in the private sector as well as from the fields of psychology and behavioural economics and is designed to explain matters in simple, straightforward English.
This new system cleared up all but 15% of the debts outstanding in 2009/10, but the government did admit that some threatening letters should not have been sent out. HMRC has now offered an assurance that threatening letters will be more accurately targeted in future.
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