Collection Rates

I heard an interesting statistic the other day.

Apparently HM Revenue & Customs wrote off around £5 billion in taxes last year - a figure  which represents around 1% of the £500 billion that HMRC manages to collect in a typical year.

Not bad, I thought to myself - because these are effectively 'bad debts' where people have died or a company has gone into liquidation - debts which in one way or another cannot be recovered or are too expensive to recover. 

But there's always room for improvement and no doubt the public finances could do with an extra £5 billion - in which case more power to HMRC's elbow is all I can say.

I also wondered how well other organisations do when it comes to collecting public money - Scotland's 32 local councils, for example.

According to the Scottish Government in 2011-12 the total amount of Council Tax that should have been collected (excluding Council Tax Benefit) - was £1.987 billion.

And by 31 March 2012 - £1.886 billion was actually collected - leaving a gap of £91 million uncollected.

Now that represents a collection rate of 94.9% - significantly less than HM Revenue & Customs rate you might say - but to their credit Scotland''s councils have improved their performance in recent years.

In 1998-99 the rate was 87.2%  but this has steadily improved over the years to reach 94.9% where it stands today.

Across the UK - assuming collection rates are broadly similar - this suggest that the total amount of uncollected Council Tax was around £1 billion - in 2011-12. 

So there's a lot to play for - £6 billion or so between central and local government - which would be a welcome boost to a struggling economy.