HMRC is "worse than private companies" as it ranks bottom of list of government and private debt collectors

James Nickerson
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The report also suggests government departments can be inflexible on recovering debts (Source: Getty)

Think payday lenders are bad? Meet Her Majesty's Revenue and Customs (HMRC)...

HMRC has been ranked bottom of a list of government departments and private companies when it comes to collecting debt, a new report has warned.

A report by Citizens Advice found evidence of poor practice by the government, "including a lack of consideration given to whether people can afford repayments and people forced to pay a debt when it is under dispute".

A league table was drawn up by Citizens Advice for the study, comparing government departments with other debt collectors. The debt collectors were rated against seven factors, including how creditors resolve disputes, set affordable repayment plans and how easy they are to contact.

Read more: HMRC is failing to answer its phones and is not doing enough to tackle tax fraud

And when the results were in, HMRC was the worst overall, with an approval rate of just 34 per cent. This ranks them just above mobile phone providers, magistrate courts and the Department of Work and Pensions.

Water companies were the most responsible debt collectors, while local authorities finished second due to the way they collect council tax debt.

Some 56 per cent of advisers said they “rarely or never” get through to someone who can help at HMRC, compared with just five per cent for private debt collectors. This comes after a report released in December by Which? found HMRC was failing to answer its phones.

Read more: HMRC launches digital Personal Tax Accounts online

Remarkably, despite the Financial Conduct Authority maintaining that debt collectors including banks and payday lenders cannot demand payment without providing evidence a dispute is not valid, the report said HMRC can "continue to recover tax credit overpayments while a dispute is taking place".

“Of course people must repay government debts as soon as they can, but there is a difference between people who can’t pay and won’t pay. Our evidence shows glaring inconsistencies in how some government departments and private companies go about recovering money," Gillian Guy, chief executive of Citizens Advice, said.

“It’s unacceptable that government agencies are behind the standards set for private companies when recovering debt," she added.

"National government, private firms, utility providers and debt advice specialists need to get together and urgently agree a fair and consistent way forward."

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