Taxpayers warned over refund companies

23 Nov 2021

Self assessment taxpayers should keep their Government Gateway login details safe from tax refund companies, the Low Incomes Tax Reform Group (LITRG) has warned.

The warning comes after the LITRG found examples of taxpayers who have seemingly issued 'inappropriate' tax relief claims through self assessment tax returns.

One case saw a refund company ask a taxpayer to register for a self assessment tax return to claim employment expenses. However, the company then used the individual's Government Gateway login credentials to prepare and submit a tax return, which included claims for tax relief under the Enterprise Investment Scheme (EIS). 

This claim generated large refunds which were sent to the refund company and then paid to the taxpayer after commission had been deducted. The taxpayer was unaware of the claim made on their behalf. HMRC has now contacted the taxpayer demanding that they repay the full amount as it was incorrectly claimed.

Meredith McCammond, Technical Officer at the LITRG, said: 'It is entirely legitimate for taxpayers to use tax refund companies to claim refunds on their behalf because not everyone wants to deal with claims themselves and some people would prefer to pay someone to claim on their behalf. But we warn that there are serious consequences of getting caught up with an unscrupulous tax refund company.'

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