Thousands complain to HMRC about tax repayments

The number of people complaining to His Majesty's Revenue and Customs about companies claiming tax repayments on their behalf has more than tripled in two years, a Money Box investigation has discovered.

Many say this is happening without their knowledge or permission.

HMRC admits there are significant concerns about repayment agents and is "considering its next steps".

The complaints are about what are called "deeds of assignment".

There have been 1,808 complaints so far this year, compared with 545 in the whole of 2020.

A deed of assignment is when a person signs over their right to something, usually money related, to someone else to claim on their behalf.

When used properly, by legitimate tax repayment companies, they can help people get money they probably wouldn't otherwise manage to claim for.

But the market is unregulated and open to abuse.

John Strawbridge is retired and two months ago he received three letters from HMRC.

The letters explained the £974 of marriage allowance John had claimed for would be paid, as requested, to a tax repayment company.

The problem was John had never heard of the company involved, had never claimed the money and, two months on, has still not seen a penny of it.

"It was a great shock," he said.

"I'm always very careful to fill in all my income tax and any other form and keep copies so... I spoke to my wife and said 'what on earth's going on, we haven't done anything about this. We'd better find out what's going on.'"

Because a deed of assignment is a legal document both parties have to agree to cancel it - it is impossible for only one party to do so.

In John's case he's spent weeks trying to contact the company HMRC told him it's paid his money to. He's heard nothing, got nowhere and has no idea when he might see any of his money.

"I wondered how on earth can this deed of assignment been made?

"I haven't given them permission to take money form HMRC and put it into their bank account instead of mine.

"I was absolutely sure that we have never asked for a deed of assignment and I'm absolutely sure I would never have forgotten giving someone else the opportunity to take all this money from me... because I'm sure it was a fraud."

Jan 2022 - 16 August 22 - 1808 cases

Source: Money Box FOI request to HMRC

Because the tax repayment sector is unregulated it can be abused by some companies operating among the legitimate ones.

As such while some people knowingly sign up with a repayment company, get their money as expected, minus an agreed fee and move on for others there's nothing but confusion and anger.

HMRC says it recognises there are significant concerns around the use of repayment agents and, earlier this summer, it launched a review on how to better protect taxpayers who use them.

Finally it said it's currently "analysing the responses to that consultation and considering its next steps".

Joanne Walker is from the Low Incomes Tax Reform Group, which made a submission to HMRC as part of its review.

"This is concerning but it isn't really a surprise, it chimes with what we've been seeing over the past couple of years," she said.

She added that some companies are "being unresponsive, charging really high fees, making over-inflated promise, having unclear or hidden terms and conditions.

"We've seen a lot of social media advertising and maybe an online inquiry form suggesting someone should check if they're eligible.

"People might fill in one of these inquiry forms... and there may be a tick box on there. Inadvertently, if they tick that box, that might involve signing up to various terms and conditions and in itself will lead to the generation of an application and a deed of assignment even though the taxpayer thinks all they have done is make an inquiry.

"We've asked HMRC to stop accepting the deeds at face value because some of them may have been generated fraudulently. By simply checking with the taxpayer if there is a deed of assignment and if they understand what it means so really taxpayers need to contact HMRC if they're married."

You can hear more on this story on BBC Radio 4's Money Box podcast by clicking here.