HM Revenue & Customs will arrange for debt collectors to let loose on taxpayers to recover around £1.5bn of outstanding taxes and other money owed.

The actual purge might find the collectors accustomed to generate an extra £1.35bn a year to the Government – 10 times greater than these people currently do. The deal is thought to be worth up to £70m for the debt collecting companies.

The crackdown could see people who owe just a small amount being hunted down.

When HMRC ran a pilot scheme last year it targeted taxpayers who owed a lot more than £10,000 through self-assessment, had not paid PAYE debts of up to £500 from before 2007, coupled with National Insurance bills of up to £700.

Instead of coping with HMRC officials, some taxpayers may have their bills forwarded to outside firms. These will after that have the ability to phone the debtors, post letters and, ultimately, send round bailiffs in order to recoup the owed tax.

Tax experts have reacted angrily towards the massive contracts being awarded to the debt collection firms.

Elaine Clarke, managing director of Cheap Accounting, says: ‘How dare HMRC use our money to get these companies to collect debts after it has failed to get the tax right for millions of people for a number of years?

‘Among those with unpaid bills could be those on benefits or the elderly – the most vulnerable. They will be scared witless by debt collectors knocking on their door.

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