A warning about tax refund companies
Posted on 25th August 2021 at 18:01
Do you think you may be entitled to a tax refund?
Are you unsure about the industry-specific allowances you are entitled to as a business?
Have you been approached by a tax refund company recently?
It may be tempting to call upon the services of a tax refund company to handle a claim of overpayment. After all, we know that UK tax payers do overpay, and these ‘experts’ know all of the hidden refunds you could be entitled to.
But before you proceed, we would like to bring to your attention the hidden refund trap.
What is this?
Tax refund companies will target you if you are likely to be owed a refund. They’ll ask you to sign a deed of assignment which means that any refund is paid to them rather than you. As the tax payer you’ll receive the net amount. This is normal practice, and completely lawful.
But what they may not tell you, is that the deed may cover ‘any other refunds’ and will deduct a fee for this, even if they have not been involved in claiming it.
This means that the tax refund company can take a percentage of all of those other refunds due to you, not only the specific tax refund you are claiming, going back a maximum of years. This can be as much as 50% of the refund due.
Further, the deed may remain in place indefinitely for a particular tax year and if you apply to have this removed, they may charge you an additional fee.
What is HMRC doing?
The Low Incomes Tax Reform Group is calling upon HMRC to prevent these companies from claiming fees unfairly from tax payers and becoming trapped in an arrangement which they may be unable to escape from.
HMRC are being asked to make it clear that tax payers can claim directly, or through their accountant, without losing a percentage of the refund due.
In the meantime, LITRG advise tax payers to read and understand the terms and conditions before signing up with any tax refund company.
If you’ve already signed up, check with HMRC if a deed of assignment has been lodged on their records.
And if you feel you may have been the victim of the hidden refund trap, and the tax refund company in question is a member of a professional body, you can report them for any breach you have suffered.
What’s the alternative?
Your accountant can advise and support you with tax refunds, and will be totally transparent with the amount you are due and how much they expect to be paid for helping you. You’ll never be asked to sign an agreement which you are unsure or unhappy about. And we’ll never trap you in deed which you are unable to escape from.
If you’d like to explore the possibility of a potential tax refund, contact Godfrey Mansell & Co here and we’ll explain the process to you in a clear and honest way.
Whilst every effort in ensuring the accuracy of the content of these notes has been considered, we cannot be held responsible in any way in regards to any consequences and/or decisions arising from the information provided. For specialist advice tailored to your individual circumstances - please seek professional advice and contact us on the above details.
Tagged as: tax refunds
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