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HMRC internal manual

Debt Management and Banking Manual

Debt and return pursuit: VAT: understanding the customer: first time defaulters

First time defaulters are a group that have been identified as:

  • the most likely to respond to offers of assistance
  • the least likely to be aware of the help and advice that the department can offer them to become compliant.

The main aim for this customer group is to ensure that next time the right tax is obtained at the right time. This means that any action we take must be focused on ensuring that the customer realises that future compliance is the most important issue and we do not want enforced recovery of the current debt to jeopardise this.

Identification of first time defaulters

When a new taxpayer record is created on IDMS, this means the taxpayer has never been reported before and has not had any previous debt management history.

Contact with first time defaulters

If there are no inhibiting factors on the VAT Mainframe, the new debt will go through the automatic campaign route. Depending on the current campaign debt levels, this means either the issue of a series of automatic letters or contact from DMTC.

Telephone contact may expand our knowledge of a business’s situation and problems may be improved where we are able to identify the key reasons for default. Targeted advice and support, either by letter or phone can considerably improve compliance.

It will not always be possible to make telephone contact with the taxpayer. Where contact attempts fail or no phone number can be obtained for DMTC, the case will be sent for letter issue.

Records of any conversations should be accurately recorded on IDMS Notes stating any contact attempts, conversation and any manual letters issued. It is important to set appropriate Next Actions and BFs.