A firm hired to collect outstanding debts for the Government has launched a legal action against the Office of the Tax Commissioner.

Oarrs Inc filed a writ against the Government office on July 26, just weeks after it was revealed the firm had clawed back almost $13 million in unpaid land tax on behalf of the Government.

The company is represented by law firm Walkers (Bermuda) Ltd, but no other details about the action were available.

Oarrs Inc was hired as a debt collection consultant by the Office of the Tax Commissioner last June.

A notice published in the Official Gazette said the contract would run until June 30 this year and that Oarrs Inc would act as a “debt collection consultant providing ongoing liaison between the Government and taxpayers or their authorised agents with past due land tax accounts”.

It added the firm’s role was to review debtor files, agree and document negotiation strategies used on debtors, monitor compliance, manage the debt collection process and provide the Government with a report.

Last month, a Pati request revealed the firm had recovered $12,717,099 between September 2020 and April this year and that the company had been paid $99,826 at that time.

The contract Oarrs Inc had with the Government stated it would receive 15 per cent of all land tax arrears recovered, which would amount to about $1.9 million.

The Government was still owed $70.9 million in land tax, with $57.2 million of that more than 90 days in arrears.

The deal between the company and the Government made headlines when it was revealed Oarrs Inc was not licensed as a debt collecting agency in Bermuda and was not permitted to operate as such under Bermuda law.

Legislation that came into effect at the start of last year required a debt collection licence for anyone “pursuing and collecting a debt” who is not the creditor.

Lindsay Simmons, a government senator, said after a review it had been determined that Oarrs Inc was “not a debt collector” and would be regulated under the Companies Act rather than the Debt Collectors Act.

Both Oarrs and Government did not respond to requests for comment by press time.