£15.1billion owed to HMRC due to ineffective debt management

cash pile in ocean

A vast amount of money is owed to Government, and H M Revenue & Customs (HMRC) in particular, due the lack of a strategic cross government approach to the managing of that debt and getting more money paid to the Exchequer. So say the Public Accounts Committee.

HMRC was owed £15.1 billion of the £22 billion the National Audit Office says was due to government departments at the end of March 2013. With the exception of HMRC, the level of debt owed to the government has increased in the past six years across departments. The majority of debt owed is old, with over 60% of HMRC’s debt being over 180 days old at 31 March 2013. HMRC is the only government department to have reduced its debt balance. However, whilst there has been some improvement, a considerable part of the drop comes from writing off or remitting £3.5 billion of tax credits debt and other debt the department considers to be uncollectable.

One of the recommendations included in the committee’s report is that the Treasury should enforce key performance indicators for debt management across government departments. Should this recommendation be implemented, it will invariably have an impact on the manner in which HMRC manages its debt. It is possible that tax payers owing HMRC any cash will find themselves under greater pressure than they are currently to pay up. Of course the majority of taxpayers who make their payments in a timely fashion will welcome any action taken against those that are able to pay their tax on time, but chose not to. It is to be hoped however, that those who want to pay, but need time in order to do so, will be dealt with in a sympathetic fashion.

If you wish to discuss the impact of this decision on your business, please contact either Gill Yates  or David Pegg on 0845 177 5500  or your usual Burgis & Bullock contact.

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