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Published on 14 September 2022

High Volume Repayment Agents

LITRG have responded to HMRC’s consultation on raising standards in tax advice: protecting customers claiming tax repayments.

LITRG response: High Volume Repayment Agents. Illustration of a man with arms crossed, with a calculator and a clipboard.

High Volume Repayment Agents (or tax refund companies) are businesses that help people who are due a tax refund to claim the tax refund from HMRC. Such people will include, for example, employees who have spent their own money on tax deductible employment expenses, people who can claim the Marriage Allowance and people who are due a tax refund on their PPI compensation (where the flat rate 20 per cent tax deducted on the interest element may be too much).

Some tax refund companies are meeting a genuine need in the market and operate according to appropriate standards but the area is unregulated and there is a huge spectrum of providers.

Over the last 18 months, we have dealt with a large number of taxpayers queries that demonstrate there are serious issues with certain tax refund companies including: being unresponsive when taxpayers are trying to contact them, high fees, overinflated promises, unclear or hidden terms and conditions, data protection concerns where they request significant personal information in order to process payments of refunds, people being confused into thinking they were dealing with HMRC, and deeds/letters of assignment. Often all of these issues are present in any one single query. Most of the queries relate to a small handful of tax refund companies. 

We therefore welcome the opportunity to respond to this consultation - it is absolutely right that HMRC put deeds of assignment and other consumer protection issues to do with tax refund companies under the spotlight.

In our response we have set out our views on:

  • restricting the use of assignments, where contracts legally transfer the right to a repayment from a taxpayer to an agent

  • introducing measures designed to ensure taxpayers see material information about a repayment agent’s service before entering into a contractual agreement

  • requiring repayment agents to register with HMRC

We also caution that whatever changes are made as a result of this consultation, the most egregious individuals/companies are likely to look for new ways to profit if existing routes are removed. For example, we may see more tax refund companies chasing for ‘unpaid fees’ (for instance where an individual makes an enquiry but does not proceed to sign up to their services) or going down the route of asking for people’s personal government gateway credentials so they can operate behind the scenes. This is something that HMRC must be aware of and which needs careful monitoring. HMRC’s response to the issues raised by us (and others) in relation to certain refund companies over the last few years has been slow which has meant more taxpayers have been affected unnecessarily. Going forward, processes need to be in place to ensure HMRC are not only doing their own robust monitoring but that action is taken at the earliest opportunity when issues are identified.

You can find the consultation document here

You can find our response here

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