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HMRC not HVAs should prompt routine rebate claims

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With high volume agents (HVAs) popping up and cashing in on the public’s ignorance, Paul Aplin says it’s time HMRC helped taxpayers to make the routine claims they are eligible for.

26th May 2022
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Recently, while reading the online edition of a well-known newspaper, I was confronted with one of those incredibly annoying pop-up adverts. It said that if I was married, I might be owed a tax refund. Having never looked at a website for a tax refund company before, temptation got the better of me. 

The website had an eligibility checker. It told me that I couldn’t qualify for marriage allowance if I had already claimed it and moreover that neither I nor my spouse could claim marriage allowance if we were self-employed. Wondering how many people would have taken these answers at face value and given up, I decided to look at a few more sites devoted to marriage allowance and employment-related expenses. Fees varied from 35% of the refund obtained plus a £50 administration fee (plus VAT) to 42% plus a £100 administration fee, plus VAT. 

At this point I remembered the research paper HMRC commissioned last year The use of high volume agents to claim tax rebates, which sought “to better understand the motivations and experiences of customers of high volume agents”. The research found a wider range of fees than I had (from 10% to 50% of the refund obtained) and highlighted some other issues.

Just sign here

One was the use of deeds of assignment by some high volume agents (HVAs). The research found that “participants generally did not understand that the HVA could receive commission for additional claims made by the customer directly to HMRC or through another HVA during the time period specified on the agreement.” In short, the HVA could take commission on future claims even if made by the taxpayer, another agent or adjusted through a PAYE coding. This is an issue that the Low Income Tax Reform Group (LITRG) has rightly expressed concerns over, and has now published comprehensive guidance on.

This issue is of particular concern for those facing language or literacy barriers and for those who worry about dealing with government departments. If deeds of assignment are used at all – and I share LITRG’s concerns here – there should be a prominent warning in plain language leaving no doubt in the individual’s mind about exactly what they are agreeing to. 

If you know, you know

Awareness is a problem. Many people don’t realise that they might be entitled to claim until an HVA advert pops up. And if that is how they make the discovery, they probably don’t realise that they can claim direct (and free of charge). The survey confirms this: “It was rare that participants had considered applying directly to HMRC – either because they were not aware that they could, or because they thought they were already applying through an official channel.”

Several participants, having discovered during the survey interview that they could claim directly and free of charge through HMRC, said they would prefer to do this for any future claims to avoid paying commission, but that if doing so proved complicated, they would still prefer to use an HVA. 

Others learned about their entitlement from friends and family, work colleagues, suppliers of equipment and uniforms, trade unions and employers. 

Having become aware of the potential for a claim, the next problem is the perceived or actual complexity of the process of claiming. 

For those confident enough to do it themselves, the sections to claim marriage allowance and tax relief for job expenses on gov.uk are actually pretty good, guiding potential claimants through a series of questions in relatively straightforward language. But some would doubtless still prefer to pay someone else to do the navigating. 

What’s the answer?

HMRC has made no secret of its concerns about some HVAs and has taken action in the past to deal with what it described as unacceptably high levels of ineligible claims. It has recently made using Form P87 mandatory for employment expenses claims and will reject claims made on substitute forms (used by some HVAs). The new P87, which enables multi-year claims and claims for multiple employments, will be processed automatically using Optical Character Recognition and Robotic Process Automation. Any P87 with attachments (including deeds of assignment) will, however, be processed manually, delaying the repayment process and disrupting the HVA business model. I suspect we will see further measures aimed at addressing HMRC’s concerns. 

The core issues I want to address however are awareness and process. The survey suggested that HMRC needed to raise awareness of the process and that it should be made clearer and easier to navigate. I agree.

Proactive and personal

I’d like to see HMRC being as proactive as possible on the awareness front, signposting reliefs through general and targeted advertising, through employers and trades unions, and through the sources that the research found potential claimants are most likely to engage with. I’d also like to see technology used to the full to help people navigate the claim process (the survey, incidentally, found that participants’ levels of confidence using digital services were generally high).

Smart use of technology, delivering entitlements simply and at no cost to the claimant, could change people’s perception of the tax system and of “dealing direct”. If a claim can be made easily online through the Personal Tax Account (or going forward, the Single Customer Account) or the HMRC app on smart phones, more people will be empowered to self-serve. 

I’d encourage HMRC to go even further and use technology to proactively prompt individuals to claim, if the information held suggests they could be eligible. 

There will always be people who want – and are happy – to pay for help (and there will always be plenty for accountants and tax advisers to advise them), but my vision for the future is one where the journey to make basic, routine claims starts not with a commercial pop-up and ends with a substantial fee, but one that starts with a proactive prompt from HMRC and where the process continues via HMRC at no cost at all. 

I think it is entirely achievable. It could even make pop-ups toast.

Replies (8)

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By Hugo Fair
26th May 2022 16:41

That's a long article (of shaggy-dog proportions) just to get to the prepared punch-line!

But whilst I'm with you with regard to the pernicious tribes of HVAs, "Smart use of technology" is not the global panacea that you seem to think. In particular your belief that people are even aware of (let alone have managed to access) their Personal Tax Account is not what I encounter often.

I'm so used to the gap between the theory and the reality that I held an impromptu survey during a recent Neighbourhood Watch meeting ... so a generally well-educated and fairly well-off bunch including many professionals ... with the following results (out of 89 surveyed):
* 8 knew of their PTA (although another 23 had heard there was 'something of that sort');
* 2 remembered using it more than once;
* 71 couldn't imagine the purpose ("they'll write to me if it's important won't they").
For those who like their numbers to add up - 8 people heard the word 'tax' and either fell asleep or remembered an urgent appointment back at home!

Maybe that's not a good sample of those 'motivated' to interact with HMRC ... but then what group is?

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Replying to Hugo Fair:
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By KateR
27th May 2022 10:03

I agree with your comment about Personal Tax Accounts. As for doing things 'easily' through them; I have clients who still struggle to actually log into the PTA, never mind do anything when they get there.

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By TASG
27th May 2022 10:29

Paul is right.

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By johnjenkins
27th May 2022 10:34

HMRC have never helped "customers" with what reliefs and allowances are available. So if a company advertises what might be claimed - why not?

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By gillsoffice
27th May 2022 12:21

The tax system is just way too complicated for even the simplest of cases and puts most of Joe Public off just at the mention of the word 'tax'. When I asked several professional, and non- professional, employed earners if they knew what a tax code was and how it was calculated they had no clue! They just assume it's ok and HMRC will collect the correct tax. They wouldn't even think of setting up a personal tax account. To many, the Inland Revenue are scary - don't contact them and hope and pray they don't contact you!
This is wrong. We should have a system where an employee can easily check if their tax/nic is correct, without having to sift through pages and pages of the HMRC website and make extra claims for minimal amounts or get taken in by HVAs with unfavourable clauses hidden in their t&cs.
Most of my generation are gradually getting used to using the internet and online accounts, but I fear it is still too big a step for a lot of people. So, we need to focus on those who are computer/tech savvy and way ahead of us- the young. I would like to see, and I'd be prepared to help with, an annual seminar to be held for leavers in secondary schools and colleges giving them an overview of the employment tax rules, paye and tax codes and how it all works. Tell them about personal tax accounts and how to contact HMRC and navigate the HMRC website. Tell them not to be afraid!
As we all know, from the advent of Self Assessment, HMRC want less input with 'customers' rather than more, so it's up to us to teach our youngsters the basics and how to rectify problems using the tools they have at their fingertips (literally!). Maybe they can then explain it to their mums and dads and grandparents.

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Replying to gillsoffice:
By Nebs
27th May 2022 23:13

gillsoffice wrote:

The tax system is just way too complicated for even the simplest of cases and .....

What have the Office of Tax Simplification achieved?

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By AndyC555
27th May 2022 16:17

Have you had a tax accident that wasn't your fault?

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By Mr J Andrews
29th May 2022 10:53

Suggesting James Harra's HMRC help Joe Public is akin to the Titanic's Edward Smith asking his crew to help its third class passengers after colliding with the iceberg.

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