New powers for HMRC to trace debtors

HM Revenue & Customs (HMRC) has been awarded new powers to trace contractors working as sole traders or limited companies who owe money.

A large amount of correspondence requesting payment from debtors is returned as the addresses held are out of date, the organisation explained.

The powers, which are being introduced as part of a new Finance Bill, enable HMRC to request the most up-to-date contact address from a third party such as a local council, a company or an association.

In a statement, HMRC said: "The new power creates the lawful means for third parties to provide information to HMRC. A third party that complies with a notice issued on these grounds has discharged its statutory duty, even if a later change in circumstances means that the debt is not due."

The body added that if an organisation chooses to not comply with the request then it could face a fine.

Meanwhile, HMRC is thought to be paying back up to £7 billion to small businesses, including sole traders and limited companies, to compensate for tax overpayments.