Protection for taxpayers using repayment agents

HMRC have recently announced a number of steps to improve transparency in the repayment agent market in order to protect taxpayers. This has come as a result of repayment agents who have not been clear about their terms and conditions, which led taxpayers to not understand what they were signing away or even that they were dealing with a third party and not HMRC directly.

The chancellor announced at the Budget to render void assignments of income tax repayments. This legislation commenced on budget day, 15 March 2023. The consequences of this are:

• Any assignment notified to (received by) HMRC on or after 15 March 2023 will be legally void
• Any assignment documents, including those signed before 15 March 2023, notified to (received by) HMRC on or after 15 March will be legally void:
• As a concession, however, HMRC will continue to accept these ‘assignment documents’ but treat them as non-legally binding nominations
• If the taxpayer subsequently cancels these nominations, the repayment will not be made to the agent
• Agents do not need to amend assignment documents already signed by their clients but not yet sent to HMRC for the reasons set out

Repayment agents have become a growing concern as more and more taxpayers are opting to use their services in the promise of a tax refund. They often use pop-up adverts on social media sites targeting taxpayers who may not be aware that they are able to claim the advertised tax refund directly from HMRC themselves for free. Repayment agents may also not give correct advice and ensure that you are actually entitled to certain reliefs before making a claim to HMRC. This has resulted in tax payers actually having to payback reliefs claimed in error. They have also been known to take a large percentage of the tax rebate or even use a deed of assignment to take commission on future claims made by the tax payer.

If you have previously used a repayment agent then they may be still be included on HMRC’s record as the authorised recipient of your tax refund. With HMRC’s tax calculations due to be sent out soon – you should update your details if you wish for your tax rebate to be sent directly to you.

In May last year, HMRC made the P87 form mandatory which meant claims for tax reliefs and expenses had to be via the prescribed form, rather than a refund agents customised claim form which often resulted in taxpayers signing a deed or letter of assignment.

It has become more important than ever to ensure that any claims made are completed using the proper channels. The tax department here at Lambert Chapman LLP can help ensure that you are claiming all the reliefs you are entitled to and any expenses you may be able to offset against your income.