HMRC and Chancellor Rachel Reeves have initiated a stringent crackdown on tax debt, spending an eye-watering £5 million monthly on private debt collection services. This move is part of the Labour government's intensified effort to increase tax revenue.
Massive Spending on Debt Collection
Data reveals that HMRC paid debt collection group TDX over £21.1 million between October 2025 and February 2026. HMRC utilizes TDX to oversee several private debt collection agencies, aiming to recover unpaid taxes from individuals and businesses. The spending on TDX for debt collection services surged by 73 percent from January to February, reaching £5.2 million.
Criticism from Business Leaders
Kenny MacAulay, chief executive of accounting software platform Acting Office, stated that government spending on private debt collectors would "rub salt in the wound of struggling businesses forced to tackle higher taxes, operating costs, and surging interest rates."
Hiring More Tax Officials
HMRC has announced plans to hire 5,000 additional tax officials over the next five years, with 500 more confirmed following the Spring Statement last year. Lucy Sauvage, a senior director at Alvarez & Marsal Tax, noted that "engaging with HMRC can be daunting and it can take hours just to get through to someone on the designated phone lines, and the debt agents manning these lines can be a little overzealous."
Concerns Over Small Business Tax Rules
This week, a leading accountancy firm raised alarms about an HMRC consultation on tax rules for small businesses. Blick Rothenberg argued that the consultation into close companies—those with fewer than five shareholders—fails to address pressing issues and will not close the tax gap, leaving firms entangled in more red tape.
HMRC Response
A spokesperson for HMRC said: "Most customers meet their tax responsibilities, with 90 percent paying in full and on time. We take a supportive approach to dealing with customers who have tax debts and do everything we can to help those who engage with us to get out of debt, including offering instalment plans."
