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LITRG tax refund companies

Refund companies fleece taxpayers with small print


The Low Incomes Tax Reform Group (LITRG) is concerned that many taxpayers have been hit with further fees from tax refund companies after unwittingly signing a deed of assignment that covers multiple years. 

20th Jul 2021
Community Assistant AccountingWEB
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LITRG has received an increasing number of reports from confused and alarmed taxpayers who have used tax refund companies for a specific claim, such as a PPI (payment protection insurance) or working from home tax refund. But these taxpayers are now being subjected to additional fees for unconnected tax refunds. 

Deed of assignment

Many of these taxpayers without realising may have signed a wider deed of assignment, which legally assigns a tax repayment to the tax refund company. 

Rather than collecting refunds for a specific claim, the wider deed of assignment enables the tax refund company to fetch any other refunds due dating back four years. These companies would then take a percentage of those refunds – which can be as high as 40% or 50% of the refund. 

LITRG is concerned that the refund companies have duped potentially vulnerable taxpayers. 

“In the cases reported to us recently, people either did not realise they had signed a deed of assignment at all or thought they were signing it in respect of a specific tax refund only and not for past years,” said head of LITRG Victoria Todd.  

Todd explained that ‘deed’ may sound like a formal legal document, but she warned that only the inclusion of a few words on an application pack people are asked to sign will make a valid deed.

Taxpayers caught out

LITRG has urged taxpayers to read the terms and conditions before signing anything given to them by a tax refund company to ensure they’re fully clued up on what fees will be collected within their agreement and the years any deed of assignment will cover.

“Sometimes people may agree to lengthy terms and conditions, within which wording may be buried such as: ‘as part of the process of recovering overpaid tax on your refund, a full reconciliation of your tax position will be carried out. This may result in other overpayments of tax being identified and recovered, on which our fee will apply’,” said Todd.  

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Replies (9)

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By SteveHa
21st Jul 2021 09:32

Surely this is borderline fraud, and so should be subject to prosecution.

Thanks (0)
Replying to SteveHa:
By Brend201
21st Jul 2021 11:38

But it will depend on what side of the borderline it is. I'm sure these opportunistic companies have constructed the agreements to keep it legal so I suspect that there is low likelihood of prosecution.

But yes, it is disgusting.

Thanks (0)
Replying to Brend201:
By Hugo Fair
21st Jul 2021 12:07

Unfortunately the world is full of similar reptiles whose business is based on being legally defensible, but morally reprehensible.

If you want an even more widespread example ... look at recurring Credit Card
payments (aka a Continuous Payment Authority), where authorisation provided by a customer permits the merchant to take payments from them by either debit or credit card - and this authorisation remains in force until the customer cancels the arrangement. Sound familiar?

Who was it who said "The first thing we do, let's kill all the lawyers?"

Thanks (1)
David Ross
By davidross
21st Jul 2021 10:56

Could we be told more about these Deeds of Assignment? In all my experience, I have never heard of a blanket document being lodged with HMRC covering all refunds - in the rare cases where a refund has been paid to us there has been a specific authority on each occasion

Thanks (1)
Replying to davidross:
By gillybean04
22nd Jul 2021 10:06

A deed of assignment is a legal document, rather than a tax/hmrc one.

It is used to transfer a right (such as the right to be repaid a debt or property/land) to another.

Once assigned, the right belongs to the new person/company. Which is why the client would need their permission to have it withdrawn.

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By hbelton
21st Jul 2021 11:13

I had this with a client's daughter three/four years ago.
I drafted a letter for her to send to HMRC rescinding any authorisation for any refunds to go to anyone other than the individual herself and sent it recorded delivery and kept proof.

Thanks (1)
By Lambdenman
21st Jul 2021 17:47

On the subject of tax refunds, has anyone heard of Citadel Claims Ltd, who say they can get CT back by claiming against (presumably faulty or non-existent) preparation for GDPR?

I have a client determined to use them.

Thanks (0)
Replying to Lambdenman:
By thestudyman
22nd Jul 2021 19:41

Lambdenman wrote:

On the subject of tax refunds, has anyone heard of Citadel Claims Ltd, who say they can get CT back by claiming against (presumably faulty or non-existent) preparation for GDPR?

I have a client determined to use them.

Has your client paid more than £10,000 in the last 2 years to "the HMRC"?

It stinks of scam! What does GDPR anyway have to do with tax, or was that invented?

No privacy policy or Terms on website either. Though happy to say their cut is 30%...

Thanks (1)
Replying to Lambdenman:
By backwoodsman
23rd Jul 2021 06:45

Your client will be dealing with a company that was struck off at Companies House over 3 years ago. And whose address is a low-cost mail-forwarding firm, Ghost Mail. Fools and their money.

Thanks (1)