While investigating for a friend, I found this document which fairly discusses and weighs up the implications of government bodies (Councils/HMRC) incurring costs when chasing up non-payments. It outlines cases where maladministration could have occurred.
This bit is interesting for us all to note:
Case study – taking account of costs
A council pursued Mr F for a council tax debt of £839.43.
The bankruptcy process incurred costs of approximately £38,000 including VAT, legal costs of £2,260, trustee’s costs of £13,459 and trustee’s legal costs of £13,373 together with the disbursements and the costs of the Official Receiver.
The Ombudsman said:
The council cannot, it seems to me, turn a blind eye to the consequences to the debtor of any recovery option it pursues. Some courses will no doubt be administratively more convenient and less costly than others. But in selecting these options the impact on the debtor should be weighed in the balance. The dire and punitive consequences of bankruptcy, involving a multiplication of the debt many times over and frequently incurring the loss of the debtor’s home must be factor to be taken into account … I have seen no evidence that this relevant consideration was taken into account … that was maladministration.