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The financial secretary to the Treasury, Stephen Timms, has announced details of how HMRC and the Department for Work and Pensions plan to work together to recover more debt.
The departments are looking at:
- Recovering debts more cost effectively from those who owe money to both departments,
- Joint tracing services to locate individuals for whom no current address is known, and
- Simplifying payment for those owing money to HMRC and who receive benefits from the DWP.
Mr Timms said that from the spring of 2010, the Revenue will start to trial the recovery of working tax credit and self-assessment debts through deductions from DWP benefit payments.
'Participation in the trial will be voluntary. The new service will be offered to people who cannot afford to settle their debts with HMRC in one go and who would prefer to pay them off through a voluntary deduction from their benefits.'
The pilot scheme is aimed at enabling the taxman and the DWP to assess the effectiveness of collecting tax debts via deductions from benefit payments, as well as to test individuals’ response to such a method of payment.
'The trial will involve customers who are in receipt of benefit and whose tax credit overpayment or self-assessment debt is less than £1,000,' said Mr Timms.
'It will offer customers whose tax credit award has ended or who have a self assessment debt the option of paying back the debt via deductions from benefit payments as an alternative to current HMRC payment methods.'
