Victory: We helped recover £6million for taxpayers after exposing the underhanded tactics used by fraudulent rebate firms
Money Mail has helped recover £6million for taxpayers after revealing the underhanded tactics used by fraudulent discount firms.
These unregulated agents, who charge exorbitant fees for tax refunds that customers can claim for free, trap around 500,000 people each year. In June, HM Revenue & Customs (HMRC) finally promised a crackdown and launched a consultation to stamp out unscrupulous behavior. To facilitate his investigation, we called on readers to come forward and share their experiences.
Your response was overwhelming. Over the summer we have been inundated with emails and letters describing the underhanded ways you have been preyed upon by these companies. We filed two tax files and published a series of articles naming and shaming the worst offenders.
In some cases, the fees charged exceeded the tax refund due, while others had been repeatedly threatened with legal action after refusing to pursue their claim.
Dozens of readers also said they had no idea they were even entering into a contract that allowed discount companies to act on their behalf.
Now, in the first step to ban shady tactics, the taxman has pledged to reimburse 60,000 people who lost huge sums of money in fees to a reimbursement company highlighted by Money Mail – Tax Credits Ltd .
Angela MacDonald, Deputy Chief Executive and Second Permanent Secretary at HMRC, said: ‘We are taking action here to ensure Tax Credits Ltd customers receive the money they are entitled to. I would like to thank the Daily Mail for highlighting these cases and helping to ensure people get their money back.
The unprecedented intervention comes after HMRC discovered major flaws in the online processes used by the company to register customers. Tax Credits Ltd offer to help people apply for refunds, such as marriage tax relief and working from home.
The third-party company operates online, flooding social media sites with enticing adverts claiming households could be entitled to hundreds of pounds.
In order for a reimbursement company to make a claim on someone’s behalf, taxpayers must sign an ironclad contract called a “deed of assignment.”
This orders HMRC to send any monies owed to the business rather than the individual, and can only be revoked if the business agrees. But Tax Credits Ltd customers did not receive a copy of this agreement during the registration process.
Instead, those who completed the form online were simply asked to provide an electronic signature and tick a box.
The company claimed that this authorized it to sign a deed of assignment on behalf of the taxpayer. This meant that customers were often completely unaware of the terms they were agreeing to – including the fact that the company would pocket a 48% fee equivalent to almost half the payment. Many didn’t even know they were signing a contract.
“It’s a huge relief – I’m so grateful”
Wait: Marilyn Duffield’s £362 work-from-home rebate had gone to Tax Credits Ltd
Marilyn Duffield has been waiting since March for a £362 working from home tax cut.
She was told by HMRC that the money had been sent to a company called Tax Credits Ltd.
But she says she doesn’t recall giving the company permission to make a claim on her behalf, and despite suing she never received a penny.
Marilyn, who recently retired and started working as a lunchtime supervisor at a local school, said: ‘I racked my brains trying to think if I had signed anything. that is. I don’t think anyone would agree to pay that much in commission.
“Money Mail has done a wonderful job of recovering this money. It’s such a relief. I am so grateful.
HMRC said it will now refund a total of £6million to Tax Credits Ltd customers, an average of £100 each.
Exact refunds will depend on the size of the payment claimed and the amount the company pocketed in fees.
Taxpayers who have already received their refunds, net of fees, do not need to do anything.
HMRC is writing to those affected, with all costs deducted to be repaid by mid-November.
The tax authorities said they were seeking to recover this money from Tax Credits Ltd. Anyone whose claim has been put on hold during HMRC’s investigation, which began in May, will receive their refund within the same timeframe.
Gillian Archer, mother of two, was thrilled to find she would receive her full payment.
The 61-year-old, who works in administration at her local community hospital in Kent, had never heard of Tax Credits Ltd until she received a letter from HMRC in May saying it had paid a personal tax refund of £607 to the company.
She does not recall signing an agreement for the company to claim on her behalf. And when Gillian asked to see a copy of the contract, she didn’t recognize the signature provided.
Crackdown: In June HM Revenue & Customs finally pledged to take action against fraudulent tax refund businesses
When she later discovered she would lose almost half of her money in fees, she refused to send proof of identity to the company – and so never received a penny.
Now, after months of suing HMRC, she is relieved the ordeal is over. “I couldn’t believe the news when I heard it. It’s wonderful,” she says.
However, critics say HMRC did not go far enough. Currently, refunds will only be issued to online customers. HMRC says it still recognizes the paper forms as a valid contract, meaning Tax Credits Ltd can continue to act on behalf of customers. And the tax authorities did not prevent the company from operating completely.
Barrister and former HMRC barrister Osita Mba said: ‘HMRC should not be treating victims differently depending on whether they used a registration process involving a paper form or an online form. It should take enforcement action through a criminal investigation.
There are also dozens of complaints about other discount companies using unfair and unclear contracts.
The number of people complaining to the tax authorities specifically about conveyances has more than tripled in two years, from 545 in 2020 to 1,808 in 2022, according to a Freedom of Information request from BBC Radio’s Money Box 4.
HMRC says there is no evidence yet of similar issues with other companies. However, he adds that a new working group has been set up to review the registration procedures for all 200 reimbursement agents.
It also intends to publish the results of its consultation within the next ten weeks.
Victoria Todd, head of the Low Incomes Tax Reform Group, said: ‘We urge HMRC to keep this issue a priority and to review all reimbursement officer practices, not just in relation to postings but other areas. consumer protection.
“Where officers fail, HMRC should use all existing powers open to them to take immediate action to protect taxpayers.”
Tax Credits Ltd did not respond to requests for comment.
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