Chris Lees, Research Officer, Money and Mental Health

How HMRC can ease the pressure on people in problem debt

19 November 2021

Last year as the country went into lockdown there were fears that many people would fall into debt or struggle to make repayments as a result of being made redundant or furloughed. The government responded with a range of initiatives, including pausing most of the debt collection activity of HM Revenue and Customs (HMRC). Such action helped many get through a very difficult year. But a recent report by the National Audit Office (NAO) has found that the tax debt owed to HMRC peaked at a record £67 billion in August 2020 and was at £42 billion in September of this year. With the recent cut to Universal Credit, increasing energy prices and other rising costs, renewed debt collection activity will put many people under financial and psychological pressure. To ease this pressure HMRC and other creditors should follow some key principles.

Why this is important

Half of people in problem debt have a mental health problem and receiving debt communications from a creditor can cause people to feel stressed and anxious. This in turn can make it harder for someone to deal with the problem or get the help they need. People can feel like they are trapped and sadly, people in problem debt are three times as likely to have thought about suicide in the past year. So it is essential that creditors like HMRC get their approach right. 

“To be in debt and to have people calling up to fifteen times a day, to have your voicemail full, to have the postman open your letterbox with even more debt letters with even more threats – is too much for anyone. You think your life isn’t worth living.”  Expert by experience

Getting the communications right

One of the key things that creditors like HMRC can do to reduce the psychological impact of debt collection and maximise help seeking behaviour is to carefully design the communications they send to someone in debt. Letters should be supportive, written in clear and easy to understand language, and contain prominent offers of assistance and signposting to support. It is promising to see in the NAO report that HMRC have been carefully considering the tone of its communications. Creditors should also consider the amount of communications they are sending out to someone, especially the frequency of outbound calls. Someone in problem debt is likely to be receiving similar communications from several creditors and the volume of contact can often be overwhelming.

“They were belligerent and frightening and heavy handed. Far too heavy handed. I was terrified and felt persecuted and abused and out of my mind with anxiety. They used post and telephone.” Expert by experience

Making it easy to get in touch

Getting in touch with a creditor to talk about your debt and to disclose that you have a mental health problem can be very challenging and involve a lot of energy. It’s important that creditors give clear information about how someone can get in touch, what might get discussed and what someone might need at hand. Different communication channels work for different people. For example, half of people with mental health problems find it very difficult to use the phone, and so creditors need to offer more than one way to get in touch. Once someone has got in touch, it’s crucial that frontline staff are well trained so that they can offer the right support and if someone is distressed send them to a specialist team. It’s good that HMRC has an extra support team that can be contacted by webchat as well as telephone. To get this right, creditors could follow the debt management vulnerability toolkit. The NAO report suggests that HMRC does not have enough staff to deal with the current tax debt burden and so it’s important that those who need additional support are prioritised.

“Those [staff] who were knowledgeable were compassionate, other times it felt like it fell on deaf ears.” Expert by experience

Ultimately creditors need to remember that this is not just about recovering debts but ensuring that they do not cause someone psychological harm. 

We want to work with essential service firms to help them improve the way they communicate to people in problem debt as part of our Mental Health Accessible programme.