The letter, dated 18 January 2024, came from a company called Advantis.
“Dear Mr Simon Hattenstone,” it said, “Contact us about your unpaid HM Revenue and Customs balance of £1,778.31.”
It wasn’t directly threatening – it offered to help me find a way of paying off my debt. But the tone felt quietly menacing, with the line stating how much I owed in bold.
The letter did not explain what Advantis is, nor say what kind of tax I owed, or for what period.
I assumed it was connected to the payroll I’d started two years earlier for my mother’s two carers. But it didn’t use the word payroll, or say PAYE, anywhere.
In February, a report by the cross-party public accounts committee concluded that HMRC’s customer service was at an “all-time low”, and the tax authority appears to be “struggling to cope” with rising numbers of taxpayers and increases in complexity. The committee said it had received an unprecedented number of submissions about HMRC’s performance, “demonstrating the extent of taxpayers’ exasperation over the quality of services and the impact on businesses”.
I am one of those exasperated taxpayers.
This wasn’t the first time HMRC had set the debt collectors on to me. In October 2022, when I started the payroll, as I am financially illiterate but keen to do the right thing with finances and taxes, I did it through an accountant. In February 2023 I received my first bill from HMRC. I ignored it, thinking it must be a mistake, because who needs to pay tax after three months? (I said I was financially illiterate.) In March I received another, then in April I was informed I owed £3,069. By now I was worried. I belatedly got in touch with the accountant, who said the bill was for real and I could pay in instalments. Instead, I paid it off all at once.
That didn’t stop a company called BPO Collections getting in touch that May saying it was time to pay outstanding tax .
After a huge amount of stress – including an HMRC officer telling me “BPO Collections don’t exist. It looks as if you’ve been scammed” – HMRC admitted that a) BPO Collections did indeed exist, and b) this outstanding tax wasn’t actually outstanding because I’d paid it two weeks before BPO sent out its letter. The officer said I’d been unlucky in the way the dates fell.
Unlucky. A one-off, I assumed.
But fast-forward to 18 January 2024 – three weeks after my mother had died, and more than a week after my accountant had advised me to pay the remaining tax I owed on Mum’s payroll so that all debts were settled. I’d done that immediately, but now here was this letter, seeming to say I hadn’t.
Last time, I ended up going to HMRC’s press office because I couldn’t get a straight answer from either HMRC customer services or BPO Collections and because I was writing about my experience in the Guardian’s Money section. This time, I couldn’t face being shunted from department to department – I went straight to the press office. Mum was newly dead, I’d done everything by the book, and here I was being threatened again over money I didn’t owe.
The press office quickly confirmed that there was no debt. I’d been unfortunate again – fallen into the black hole between HMRC receiving payment and telling its debt collectors. Could you imagine running a regular business like this? Sending heavies around for money customers coughed up days, weeks, or, as I was eventually to find out, months ago? You might well end up facing prosecution for fraud.
After much to-ing and fro-ing, HMRC explained exactly why I had been referred to the debt collector. It said letters had gone unanswered – letters I had never received – and that there had been an unpaid debt for the three months ending on 5 October. I’d made a payment on 6 November and another in January this year. But, unknown to me, the first payment had been allocated to the three months ending on 5 January 2024, not to the previous period.
HMRC said: “We apologise for the fact that you were sent a letter from a debt collection agency (DCA) when you had paid the tax that was owed. For data security and GDPR compliance reasons, we don’t allow DCAs direct access to our systems. This means that when there’s a change (for example, a tax debt is cleared by payment) we issue update files to DCAs to close cases.”
It added: “We will review the frequency of these updates, which are currently done on a weekly basis, and look at opportunities to increase it.”
Weekly? HMRC’s heavies were harassing me for money I had paid 10 weeks earlier.
And what about Advantis sending a letter that didn’t even explain why I owed the money and what period of time it covered? How can we challenge demands for money already paid when no information is provided? “We will work with DCAs to improve the content of their letters and their presentation,” HMRC said.
Advantis apologised for the “inconvenience and frustration” I experienced and said it was liaising with HMRC to investigate my case.
‘The whole thing has caused unbelievable amounts of stress’
Gobsmacked by HMRC’s inefficiency, I went on social media to see if other people were being chased for money they had paid. One man, Pat, told me he was paying by direct debit when he received a bailiff’s letter. “At the time of the letter, I was actually £1,000 in credit!” Did he get an apology? “No apology, no letter, no reference to it at all,” he says.
Simon Williamson, who lives in Chorley in Lancashire, tweeted me: “The whole thing has caused unbelievable amounts of stress and is the reason I am no longer trading at all.”
We then spoke on the phone, and I could hear the stress in his voice.
Williamson became a sole trader three years ago, working as a landscape gardener. By the second year, he was doing well and realised he was about to exceed the £85,000 cap for not paying VAT, so his accountant registered him with HMRC.
A few months later, he realised he was losing business because he had to charge customers VAT, so his accountant deregistered him for it. This was about a year ago.
Ever since, he’s been plagued with letters from HMRC demanding tax he doesn’t owe, some mentioning a payment plan that does not exist. “I kept on getting these letters, and I forwarded them on to my accountant. One day she rang me up and said: ‘This is bad – they’re expecting you to pay £3,000 in VAT.’ And I was like: ‘Well, I’ve not charged VAT in this period – I’ve not been operating like that.’ And she said: ‘I know, because I cancelled it for you.’ She’s been on to HMRC. They’ve accepted it’s their fault, but they’re still expecting me to pay their £3,000 for VAT,” he said.
The letters started to stress out Williamson, who has never been in trouble with money. He rang HMRC, which told him not to worry – that he had only received the letters because of a delay in the system. But the letters kept coming, and by now they were having a serious impact on his mental health.
Williamson, who has two children aged eight and four, felt his personality changing because he was constantly worried. “It’s stressful enough running your own business. The extra stress was the nail in the coffin.” He said it had an effect on his relationship with his partner and their children. “Because I was stressing, I wasn’t myself and I wasn’t there for the kids. I was vacant, snappy, not there. I couldn’t be the dad I needed to be for them because I was so worried about the tax.”
Eventually he decided to close the business. He loved the work, but the issue with HMRC just got too much for him. That was four months ago. Does he think he’ll start again at any point? He exhaled heavily. “I don’t know. It’s tempting, but I can’t face dealing with all this HMRC rubbish again.” He is unemployed, and in the past three months he has started receiving demands from Advantis for more than £2,500 in unpaid VAT.
When his accountant told him that part of HMRC’s IT is run by Fujitsu – the company involved in the Post Office Horizon scandal – he wondered if the system was similarly flawed.
He wondered how can it be sending out letters demanding money that he doesn’t owe for more than a year? “How much control have these Fujitsu systems got? How much damage are they doing to other people? We can’t be the only ones.”
I asked Fujitsu and it said that the problems Williamson and I had with debt letters were not related to its technology but a result of HMRC’s processes – something the Revenue confirmed.
A week after my first conversation with Williamson we talked again. He had received another message from Advantis that day. “It must be driving you mad,” I say. “It is,” he replied. No matter what HMRC told him, he was panicking. “If a debt collector turns up at my house, it’s threatening, isn’t it? I just want to be a law-abiding citizen. You think you’re doing the right thing; you employ an accountant, and you’re still getting victimised.”
I reported Williamson’s case to HMRC. An HMRC spokesperson said: “We’ve apologised to Mr Williamson for not acting sooner and confirmed the VAT debt has been cancelled.”
A few weeks later, Williamson received £100 from HMRC in redress for the distress it had caused. “That didn’t cover the cost of the loss of the business, I’ll tell you that,” he says. Thankfully, he’s started up again, things are going well and he’s had no more threatening letters from HMRC or its debt collectors.
What to do if you receive such a letter from or on behalf of HMRC
If you get a letter out of the blue from a debt collection agency acting on behalf of HM Revenue and Customs, or HMRC itself, and you don’t understand why you are being pursued or are not sure the amount is correct, you should ask for a detailed explanation.
You may want to ask HMRC to put any action on hold, perhaps for a few weeks, so it can be looked into, says Sharron West, a technical officer at the Low Incomes Tax Reform Group (LITRG). However, she adds, the debt collection part of HMRC just deals with that issue and may not know the background to your case, so you should contact the relevant HMRC department, which might be the self-assessment helpline or pay as you earn (PAYE) income tax helpline.
The third-party debt collection agencies “are supposed to behave in exactly the same way as if HMRC were collecting it directly”, West says.
• You can check that you have been contacted by a legitimate company using the list of the debt collection agencies used by HMRC on the Gov.uk website – this also has information about how they should operate. Go to gov.uk/guidance/what-will-happen-if-you-do-not-pay-your-tax-bill.
In terms of your rights, when it comes to making a complaint or submitting an appeal, “which routes are open to you depend on what has gone wrong and whether you have legal appeal rights”, the LITRG says. Its website has detailed information for consumers on complaining to HMRC and appealing against a tax decision.
If you can’t pay your tax bill in full, you may be able to set up a payment plan to pay it in instalments. This is called a time to pay arrangement.
Despite the overall amount of tax debt going up, the number of people currently with a time to pay arrangement has fallen to just over 800,000, according to the latest data. “Times are tough for many, and HMRC should be doing much more to publicise time to pay arrangements to individuals and businesses who are struggling to pay their bills on time,” says Dawn Register, the head of tax dispute resolution at the accountants BDO.
If, say, you are struggling to pay an income tax bill, provided your debt is less than £30,000, you can probably set up a time to pay arrangement online provided you meet the other conditions. As it is automated, you don’t have to speak to anyone from HMRC to arrange it, and you will be able to settle the bill by monthly direct debit payments over a period of up to 12 months.
HMRC has various options at its disposal in cases where taxpayers refuse to pay what they owe. In some cases HMRC can recover debts directly from people’s bank or building society accounts, or enforce a debt via a magistrates court.
West says that if it gets to that point, usually the first stage would be for HMRC to attempt to recover the debt through county court proceedings. Starting bankruptcy proceedings would be a last resort, probably reserved for cases that have dragged on for many years and involve sizeable debts, she adds.
