New measures to stop rip-off agents taking advantage of people by pocketing their tax repayments have been proposed by HMRC.
To achieve this, HMRC have launched a 12-week consultation Raising standards in tax advice: Protecting customers claiming tax repayments to consider ways to better protect taxpayers from Repayment Agents who make routine tax claims on people’s behalf but can take up to half, or even more, of the payment.
Taxpayers can use Repayment Agents to make claims for repayments of tax, and many are happy with the service they receive. On the other hand, many taxpayers have complained that the scale of the charges are unclear or even hidden, while questions have been raised about how some agents secure agreements from customers.
What protection will HMRC propose?
HMRC’s consultation proposes many ways to better protect the public from unscrupulous practices and ensure they receive the money they are entitled to, while also asking various questions to better understand the problem.
This includes seeking 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.
What has prompted this action by HMRC?
HMRC is aware of a number of specific concerns with the industry including excessive amounts of commission charged for routine tax repayments that can be claimed online by taxpayers for free.
There is also convincing evidence that many taxpayers do not understand the terms they are signing up to and feel misled, some even believing they are dealing with HMRC directly rather than a third party.
Other concerns include the submission of high volume or speculative claims where no repayment is due, resulting in delays to genuine claims, as well as the use of assignments which means the repayment goes to the Repayment Agent instead of the taxpayer.
The consultation is now open and will run until 14 September 2022.
HMRC is reminding taxpayers that they remain responsible for their own tax. If they do appoint an agent, they should take care to ensure they are aware of fees and the terms and conditions of service, and not to share their HMRC login details with them. HMRC has published standards for agents and will act against agents who breach them.
Questions to ask when choosing an agent:
- is the agent a member of a professional body that regulates their conduct and standards?
- will the claim be made in accordance with HMRC’s view of the law, or is HMRC is likely to challenge the validity of the claim if they look into it?
- if the agent will deduct their fee from my tax repayment and HMRC later looks into my claim and asks for the repayment back, how will I recover the agent’s fee from them in order to fund the tax bill?
- does the agent have insurance to cover them if something goes wrong, and are they registered for Anti Money Laundering supervision?
- COG907640 - Supporting Guidance: employer compliance: guidance by subject: status: establishing the employer’s/contractor’s behaviour »
- COG907570 - Supporting Guidance: employer compliance: guidance by subject: status: providing an opinion »
- COG907530 - Supporting Guidance: employer compliance: guidance by subject: status: role of the caseworker »
- COG907510 - Supporting Guidance: employer compliance: guidance by subject: status: background to determining status »
- COG930640 - Supporting Guidance: employer compliance: guidance by subject: working rule agreements (WRA): periodic visits home »