YOUR £6m victory over tax rebate sharks charging rip-off fees

Money Mail has helped recover £6million for taxpayers after exposing the devious tactics used by scammers.

These unregulated agents, who charge delectable tax refund fees that customers can claim for free, trap about 500,000 people annually. In June, HM Revenue & Customs (HMRC) finally pledged a measure and launched a consultation aimed at stamping out unscrupulous behaviour. To assist with the research, we urged readers to come forward and share their experiences.

Your response was overwhelming. Over the summer, we were inundated with emails and letters describing the devious ways these companies had preyed on you. We filed two files with the tax authorities and published a series of articles naming and shaming the worst offenders.

In some cases, the fees charged exceeded the tax refund owed, while in others, they were repeatedly threatened with legal action after refusing to pursue their claim.

Dozens of readers also said they had no idea they were even entering into a contract that allowed discount firms to act on their behalf.

Now, in its first step towards banning shady tactics, the IRS has promised to refund 60,000 people who have lost huge chunks of their money in fees to a discount company highlighted by Money Mail – Tax Credits Ltd.

Angela MacDonald, Deputy Director and Second Permanent Secretary of HMRC, said: ‘We are taking action here to ensure that Tax Credits Ltd’s customers get the money they are entitled to. I would like to thank the Daily Mail for bringing these cases to the fore and helping ensure people get their money back.”

The unprecedented intervention comes after HMRC discovered major flaws in the online processes used by the company to sign up customers. Tax Credits Ltd offers to help people claim rebates such as the marriage tax deduction and work from home reduction.

The third-party company operates online, flooding social media sites with tantalizing ads claiming that households could be entitled to hundreds of pounds.

In order for a discount firm to file a claim on someone’s behalf, taxpayers must sign a rock-solid contract known as a “deed of transfer.”

This instructs HMRC to send all money owed to the company rather than to the individual, and can only be withdrawn if the company agrees. However, Tax Credits Ltd customers were not shown a copy of this agreement during the application process.

Instead, those who filled out the online form were only instructed to place an electronic signature and check a box.

The company claimed that it gave it permission to sign a deed of assignment on behalf of the taxpayer. This meant that customers were often completely unaware of the terms they were agreeing to – including the fact that the company would collect a 48pc fee, equivalent to nearly half the payout. Many did not even know that they were entering into a contract.

HMRC said it would now repay a total of £6 million to Tax Credits Ltd customers, an average of £100 each.

The exact refunds will depend on the size of the payment requested and on the amount of compensation drawn up by the company.

Taxpayers who have already received their refund, less fees, do not need to do anything.

HMRC is writing to those affected, refunding any fees withheld in mid-November.

The tax authorities said it is trying to recover this money from Tax Credits Ltd. Anyone who had their claim suspended during HMRC’s investigation, which began in May, will receive their refund within the same deadline.

Mother-of-two Gillian Archer was delighted to find out she will be getting her full payment.

The 61-year-old, who works administratively at her local community hospital in Kent, had never heard of Tax Credits Ltd until she received a letter from HMRC in May saying it had paid a personal tax refund of £607 to the company.

She can’t remember signing an agreement claiming the company on her behalf. And when Gillian asked for a copy of the contract, she did not recognize the signature provided.

When she discovered that she would lose nearly half of her money in fees, she refused to send ID to the company – and as a result, she never received a cent.

Now, after months of chasing HMRC, she is relieved that the ordeal is over. “I couldn’t believe the news when I heard it. It’s great,” she says.

However, critics say HMRC has not gone far enough. Currently, refunds are only made to online customers. HMRC says it still recognizes paper forms as a valid contract meaning Tax Credits Ltd can continue to act on behalf of clients. And the tax authorities stopped to prevent the company from being fully operational.

Attorney and former HMRC attorney Osita Mba says: ‘HMRC should not treat victims differently based on whether they have used a paper form or online form application process. It must take enforcement action by means of a criminal investigation.’

There are also plenty of complaints about other discount firms using unfair and unclear contracts.

The number of people specifically complaining to the tax authorities about deeds of assignment has more than tripled in two years from 545 in 2020 to 1,808 in 2022, according to a freedom of information request from BBC Radio 4’s Money Box.

HMRC says there is no evidence of similar issues with other companies yet. However, it adds that a new task force has been set up to review the application processes of all 200 refund agents.

It also plans to publish the findings of its consultation within the next 10 weeks.

Victoria Todd, head of the Low Incomes Tax Reform Group, said: ‘We urge HMRC to keep this issue as a priority and review all refund agent practices, not only in relation to assignments, but also in other areas of consumer protection.

“Where agents fall short, HMRC must use all existing powers open to them to take immediate action to protect taxpayers.”

Tax Credits Ltd did not respond to requests for comment.

t.armstrong@dailymail.co.uk