HMRC to begin charging in successful actions for debt
From April 2012, HMRC will begin charging fixed costs on cases entered into the county court in England and Wales where judgment is awarded in its favour. Fixed costs will be based on a sliding scale set by the Ministry of Justice and will be shown as 'solicitors' costs' on the relevant claim forms.
HMRC uses the county court for debt enforcement actions. At present HMRC can claim only the fees it has paid to bring the action in court. It cannot claim legal costs, such as its own costs in time and preparation to bring the action. These changes from April 2012 will align HMRC with rights of other creditors. The level of costs will depend on the amount of debt to be recovered, with the maximum charge being £200. HMRC says it expects the average cost to be in the region of £87.
There was a consultation about this change in 2010, to which the Tax Faculty responded in TAXREP 39/10. A summary of responses was published in January 2011.
In Scotland, HMRC can already claim up to two-thirds of the expenses which a solicitor might claim. HMRC is not proposing any changes to the sheriff court procedures in Scotland. No changes are planned in Northern Ireland, where HMRC does not take action in the county court.
For details of the sliding scale of costs and how these are reflected on the county court claim form see The Civil Procedure (Amendment) Rules 2011. There is also a set of Frequently asked questions and answers on the HMRC website.