Press Release: Help for consumers must include clampdown on copycat tax refund companies, say the LITRG
In today’s Budget, the Chancellor has announced a green paper to examine markets that are not working efficiently or fairly. This examination must include the tax refund market say the tax campaigners, following a rise in correspondence to their mailbox from people who seem to have been misled into claiming their tax refund via a tax refund company.
Every year, HMRC pay out hundreds of millions of pounds in tax refunds, on everything from mileage claims for care workers to professional subscriptions for teachers and nurses. While it is preferable that those due tax refunds should receive them rather than not, tax refund companies sometimes charge fees of up to 40% or 50% of the value of the refund. This in itself is not illegal, but it is entirely possible and generally more beneficial for individuals to engage an accredited agent for a fraction of that amount, or even apply for their refund in person without paying any fee.
Anthony Thomas, LITRG’s Chairman says:
“Sometimes, tax refund companies use certain tactics to get people to use them. This may include partnering up with employers and/or unions, alluding they that have an inside track with HMRC, and even just confusing people into thinking that they are HMRC.
“Sadly, it is often low-income taxpayers that get caught out. HMRC are doing much to make the tax refund process easier and simpler for people to approach themselves, and we also note that a call for evidence is to be issued on employee expenses, which is to be welcomed. However, from the size of our postbag, we know that people are still losing much-needed funds by using tax refund companies’ services – and often doing so unwittingly.
“Although we think there is more than HMRC could do to help workers, such as signpost the appropriate forms or online services clearly on GOV.UK, HMRC’s efforts should form part of a wider plan to protect vulnerable workers. As such, we strongly hope that the Budget announcement on strengthening consumer protection will include putting tax refund companies under the spotlight. Action on this area could help low-paid workers keep more of their hard earned money and is long overdue. We would also encourage action to raise awareness of their entitlements or of alternative means of obtaining them, so they are less able to be taken advantage of over fees or unscrupulous practices, without in any way restricting people’s ability to obtain their rights by whatever method best suits them.”