“However, with UK personal debt standing at £1.5 trillion, HMRC should look again at whether it is wise to allow people to pay off their tax debts using credit cards.  This ensures the taxman gets his cut, but does nothing to help people manage their debts and will quite possibly get them into even greater financial difficulty”. 

Mr Bacon was speaking as the Commons public accounts committee published its report into the management of tax debt.  In 2007–08, HM Revenue & Customs (HMRC) collected around £450 billion in tax and National Insurance contributions from 35 million taxpayers. At 31 March 2008, HMRC was owed £17.3 billion in outstanding tax, interest and penalties, £4.5 billion of which was more than a year old. Debts arise when people or businesses forget to pay, do not understand the need to pay or deliberately try to avoid or delay payment.

The report finds that HMRC has not explored all the payment methods it might offer to taxpayers to settle their tax liabilities. It has only recently introduced the facility to pay by credit card and to set up direct debits by telephone and online. The report calls on HMRC to evaluate by the end of 2009, the costs and benefits of using autopayment technology and enabling people to settle their debts in cash through schemes such as Paypoint and Payzone.   

According to creditaction.org.uk, total UK personal debt at the end of April 2009 stood at £1,459 billion