The tax office’s reliance on private debt collection agencies has reached new heights, with HMRC spending more than £5.2 million on its main recovery partner in a single month, a sum that critics say is being siphoned off from already battle-hardened small businesses.
An analysis of HMRC’s transparency disclosures by think tank Parliament Street shows the department paid £5,289,528.65 to TDX Group, the company’s debt collection and insolvency administration arm, in February 2026. That represents a jump of just over £2m on January’s bill of £3,236,829.26 and dwarfs the £4,070,045.89 spent in December.
The escalation comes as Chancellor Rachel Reeves is increasingly relying on tax compliance to plug Treasury gaps, while wage growth continues to stagnate across the broader economy.
For TDX Group, the boom in government issuance has resulted in healthy returns. The company’s annual accounts, most recently filed with Companies House, show turnover increased from £63.2m to £79.7m in the last two financial years, with operating profits doubling from £3.7m to £7.5m over the same period.
This trend is unlikely to reverse soon. In the Autumn Budget 2024, the Chancellor confirmed that 5,000 additional HMRC compliance officers will be gradually recruited by 2029/2030. The Treasury expects this recruitment drive to generate additional returns of around £7.5 billion per year once fully operational. Another 500 civil servants were approved in the spring 2025 declaration, with recruitment starting in the 2025/26 financial year.
The increased pursuit of arrears is being felt clearly by smaller businesses already struggling with rising employer social security contributions, stubborn borrowing costs and weaker consumer demand.
Kenny MacAulay, chief executive of accounting software platform Acting Office, said the figures would be received poorly as owner-managed businesses were already in a bind. “These figures will rub salt in the wound for struggling businesses struggling with higher taxes, operating costs and rising interest rates,” he said. “Faced with significant overhead costs, companies will look to leverage AI and technology to reduce costs and balance the books.”
Patrick Sullivan, chief executive of the Parliament Street think tank, was more blunt. “It is unbelievable that the Chancellor’s debt collectors are raking in millions while hard-working taxpayers struggle to make ends meet,” he said. “It’s time for a radical rethink of government spending, with a crackdown on multimillion-dollar debt collectors who get rich at the expense of working people.”
TDX Group declined to comment on the details of its agreements, citing the confidentiality of its contractual relationships.
An HMRC spokesperson defended the department’s approach and stressed that enforcement was a last resort. “Most customers comply with their tax obligations and 90 percent pay in full and on time,” he said. “We take a supportive approach to dealing with customers who have tax debts and do everything we can to help those who work with us get out of debt, including providing installment plans.”
For SME owners weighing up whether pressures will ease any time soon, the direction from Whitehall suggests otherwise. As thousands more compliance officers come on stream and outsourced debt collection activities expand rapidly, the financial and reputational costs of falling behind on a tax bill are rapidly increasing.
