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Published on 12 June 2023

Informal Finance Bill briefing: Clause 332: Right to repayment of income tax to be inalienable

Informal Finance Bill briefing:  Clause 332:  Right to repayment of income tax to be inalienable. image of important paperwork

As noted in our formal briefing on Clause 332, we welcome the new provision it introduces, which renders void assignments of income tax repayments. We think the scope of the legislation could be usefully extended so that it also applies to assignments of capital gains tax repayments. In addition, we think the legislation should require HMRC to monitor whether assignments are being used with non-income tax repayments. This will place HMRC in a position to take swift and appropriate action should unscrupulous agents turn to other types of repayments where they can still make use of assignments.

Further to our formal Finance Bill briefing on Clause 332 of Finance (No. 2) Bill (2022-23), we have therefore produced an informal briefing for MPs as part of the Report Stage for the Finance Bill. This proposes two amendments:

  • Some tax refund companies have shown that they are able to adapt to changes in the market. If Clause 332 applies only to income tax repayments, it is conceivable that tax refund companies would look at other opportunities (and taxes) to exploit the use of assignments in conjunction with tax refunds. We believe one of the most likely candidates is capital gains tax. Our amendment would extend the scope of Clause 332 to encompass repayments of capital gains tax.

  • It is essential that HMRC monitor the effect of Clause 332 on the tax refund market. Our amendment requires HMRC to carefully monitor whether assignments are being used with non-income tax repayments. This refers to HMRC making use of metrics such as the number of refund claims made in respect of each tax and the number of such claims made via third party companies.

The full briefing can be downloaded here.

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