Partner Article

Avoid DCA’s at all costs says business expert

Government appointed debt collection agencies (DCA) are set to collect up to £1 billion in outstanding debts this year from UK SMEs as the government looks to focus its own resources on larger liabilities.

The ten DCAs will collect the smaller old and outstanding debts, which many businesses are unlikely to have budgeted for. In the current economic climate, this could be the final nail in the coffin for many companies.

Mark Ranson, restructuring and recovery partner at Baker Tilly said: “Anecdotal evidence suggests that businesses are finding it more difficult to collect outstanding debts and are therefore living very much hand to mouth with their cash resources.

“Whilst the majority of people in business do pay their tax on time, for some, where they have not been subject to constant chasing, liabilities may not have always been paid.”

The DCAs are likely to be fare more persistent than HRMC has been previously, as they will only be paid when the necessary amounts have been collected.

Mark recommends that businesses owing money should try and avoid this situation by paying the HRMC before the case is transferred to a DCA.

He added: “The taxpayer should take this opportunity to agree repayment terms with HMRC as these may be more beneficial than could otherwise be negotiated with a DCA.”

This was posted in Bdaily's Members' News section by Ruth Mitchell .