The UK tax authority’s growing use of private debt collection firms has come under renewed scrutiny after fresh figures showed payments to its main recovery partner exceeded £5 million in a single month.
Data compiled by the Parliament Street think tank from official transparency disclosures shows that HM Revenue & Customs paid £5,289,528.65 to TDX Group in February 2026 for debt recovery and insolvency-related services. The figure marks a sharp rise from £3,236,829.26 in January and £4,070,045.89 in December.
The increase highlights a broader shift toward more aggressive tax collection strategies as the government seeks to boost revenues amid sluggish wage growth and ongoing pressure on public finances. Chancellor Rachel Reeves has placed greater emphasis on improving tax compliance, with expectations that stronger enforcement will help close budget gaps.
TDX Group has benefited from the expanded use of outsourced enforcement. Company filings show its turnover rising from £63.2 million to £79.7 million over the past two financial years, while operating profit has doubled from £3.7 million to £7.5 million. The firm’s growing role in government debt recovery has been a key driver of that expansion.
Further increases in enforcement activity are expected. Under measures announced in the Autumn Budget 2024, HMRC is set to recruit 5,000 additional compliance officers by 2029–30. The Treasury estimates that the expanded workforce could generate around £7.5 billion annually once fully operational. A further 500 officers were confirmed in the Spring Statement 2025, with hiring already underway.
For small and medium-sized businesses, the rising intensity of tax recovery efforts is adding pressure at a time when many are already facing higher costs, elevated interest rates, and weaker consumer demand.
Kenny MacAulay, chief executive of accounting software firm Acting Office, said the figures would be deeply concerning for business owners struggling to stay afloat. He noted that many firms are already exploring automation and digital tools to reduce costs and manage financial pressures.
Criticism has also come from policy commentators. Parliament Street chief executive Patrick Sullivan questioned the scale of spending on private debt recovery, arguing that significant sums are being directed toward enforcement contractors while businesses continue to struggle with rising costs.
In response, HMRC defended its approach, stating that enforcement is only used as a last resort. A spokesperson said that the vast majority of taxpayers comply with their obligations, with around 90 percent paying on time. They added that support measures, including instalment plans, are available for those who engage with the department.
Despite these assurances, concerns remain among small business groups that intensified collection efforts could deepen financial strain on firms already operating on tight margins. With further expansion of compliance staffing and continued reliance on external contractors, the pressure on overdue taxpayers is expected to remain high in the coming years.
