As reported on the BBC, there has been a significant increase in the number of people complaining to HMRC about companies claiming tax repayments on their behalf. In fact, this has more than tripled in two years and HMRC admits to having significant concerns about the repayment agencies which are doing this.
Essentially, these complaints are about what are called “deeds of assignment,” where a person signs over their rights to something (frequently money-related) to a third party/agency who can then make a claim on their behalf. Although there are legitimate, honest brokers doing this, and charging reasonable fees for their services, the market is unregulated and seems to be increasingly open to abuse.
The complaints often only arise when HMRC contacts an individual about a repayment, only to find the person has no idea what they are talking about. In some instances, as reported by the BBC, not only does the person not know about the claim, but they have not received a penny of the money due.
The Low Incomes Tax Reform Group is, unsurprisingly, concerned about this, although noting that it isn’t a surprise. A spokeperson told the BBC that some companies are “being unresponsive, charging really high fees, making over-inflated promises, having unclear or hidden terms and conditions.”
Part of the problem is social media advertisements which encourage people to “make enquiries.” People have to be wary of these because sometimes simply ticking a box on an enquiry form is sufficient to give these dodgy firms licence to pursue a claim. Unfortunately, a deed of assignment is a legal document so both parties have to agree to cancel it – it is impossible for only one party to do so.
There have been 1,808 complaints so far this year, compared with 545 in the whole of 2020. HMRC has recognised that there are significant concerns around repayment agents and launched a review on how to better protect taxpayers who use them. At present, it’s said to be “analysing the responses to that consultation and considering its next steps.” If you have any concerns about deeds of assignment, or simply wish to find out what you may be able to claim via the tax system (such as marriage allowances for example) please get in touch.
Vivian Linstrom, M&S Accountancy and Taxation