Ian Lavery – 2014 Parliamentary Question to the HM Treasury

The below Parliamentary question was asked by Ian Lavery on 2014-04-10.

To ask Mr Chancellor of the Exchequer, what the average cost is of recovery of £1 of debt by HM Revenue and Customs debt management staff.

Mr David Gauke

HMRC collects about £475 billion of tax revenue every year. 90% of this is collected by the due date; just 10% of it becomes overdue and a debt that HMRC has to recover/enforce.

It would be misleading to attribute the effect of enforcing tax that is not paid on time outside the context of collecting tax that is collected on time.

Accordingly, we do not routinely measure the ‘average’ cost of collecting £1 of debt.

HMRC uses a number of different methods to recover outstanding debts ranging from automated processes to more targeted enforcement tools as well as partnering initiatives with private sector companies. The application of specific interventions depends on a number of factors including customer behaviour, the economic climate, and our overall approach to maintaining the health of the tax system and tackling non-compliance.

In 2011 HMRC published the results of an international benchmarking study which compares HMRC’s operational performance to nine other international tax administrations. Results from this study showed HMRC had the lowest cost of all ten countries.

Over the long term 99% of taxes due are collected with only 1% being lost to the Exchequer, almost all of which is due to insolvency.