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Taxman calls in debt collectors

Stephen Womack, Financial Mail
26 May 2009
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There are fears that the Government is taking the first steps towards
outsourcing the tax system after Revenue & Customs announced plans to
call in private debt collectors to chase unpaid tax.

Revenue & Customs is negotiating contracts with debt collection agencies

for a nationwide six-month pilot project to speed the flow of unpaid income
tax, corporation tax and VAT.

The scheme is expected to start later this year.

The Revenue was owed •25 billion as of March 2008, the latest figure
available, in a mix of outstanding tax, interest payments, penalty charges and
overpaid tax credits.

John Cassidy, tax investigations partner at national accountant PKF, says:

'The big concern here is taxpayer confidentiality.

'What information are they going to give out about your or my personal tax
affairs?'

Local tax offices usually chase and collect overdue money and Cassidy says
records are often out of date.

The Revenue says: 'We take data security very seriously. The debts will
remain ours. We will be responsible for the collection and the management
of the debts.'

The moves are part of a wider overhaul of procedures to boost the rate of tax
collection as the public finances suffer in the downturn.

Rules that came into effect last month have given Revenue officials wider
powers to investigate tax affairs.

They can enter business premises and seize records, while personal
taxpayers can face extra demands to produce records with no right of appeal.

The new powers could also help the Revenue in any investigation of whether
MPs have abused the capital gains tax rules to profit on their second
homes. The Revenue is also planning a further clampdown on those with
savings in offshore accounts.

It is seeking account details from 500 banks and will offer a final chance this
autumn for people to own up to offshore funds before taking action against

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Revenue & Customs calls in debt collectors | This is Money Page 2 of 2

them. Cassidy says: 'Overall, the Revenue is getting harder to work with. It
is getting more clinical and more adversarial.' There is also growing concern
over delays in making refunds to those who have overpaid tax.

The Revenue is selecting a proportion of repayments for extra fraud checks

at a specialist unit in Bristol. Rob Durrant-Walker, a tax manager in the
York office of accountant UHY Hacker Young, says delays of two months
are common and in some cases they can stretch to three months. He says:
'When Bristol takes over the case, your online statement of account says a
refund has been paid, but the money doesn't arrive. Taxpayers are told
nothing about the extra checks.'

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The Revenue pays no interest on income tax refunds it owes, but still
charges 2.5% on overdue tax. Retired hotelier Deirdre Buchanan, pictured
above, is one of those waiting for a refund. 'My tax return was submitted on
time in January,' she says. 'The accountants tell me I am due a •5,000 refund
because of losses on an investment. But I have heard nothing.'

Deirdre, a widow in her 70s from Pickering, North Yorkshire, says: 'The
delay is frustrating. I was hoping to take a holiday this year but I haven't
been able to plan anything because I am waiting for this money.' Cassidy
says: 'It is a bit clandestine that the extra checking is being done behind
closed doors. A cynic might say the Revenue is hanging on to the money for
as long as it can.'

• Have you been waiting weeks for a tax refund? Write to Stephen Womack,
Financial Mail on Sunday, Room 445, 2 Derry Street, London W8 5TS or
email stephen.womack@mailonsunday.co.uk.

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http://www.thisismoney.co.uk/tax/article.html?in_article_id=486483&in_page_id=11 12/07/2009