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HMRC shuts down tax deduction business after we expose its lavish fees and devious tactics
A tax deduction scam has been shut down by HM Revenue & Customs (HMRC) after the Mail revealed its devious tactics.
Tax Credits Ltd can no longer act as a refund agent after the IRS discovered it had committed serious anti-money laundering offences.
Angela MacDonald, deputy director at HMRC, said: ‘Tax Credits Ltd have neglected their responsibilities under the anti-money laundering measures designed to protect us all from financial crime.
Banned: Tax Credits Ltd can no longer act as a refund agent after tax authorities found it had committed serious money laundering offenses
“We will not allow a small number of ill-wishers to tarnish the reputation of the entire tax agency industry.”
HMRC’s move came after Money Mail raised the alarm last year about scam fees being charged by unregulated agents for tax refunds that people can claim for free.
The inquiry helped secure a £6 million refund in October to taxpayers who lost huge amounts of money through rebates that were rightfully theirs by Tax Credits Ltd.
In a major win for this newspaper, HMRC refunded 48,000 taxpayers after discovering serious flaws in the online processes used by Tax Credits Ltd to sign up clients.
The company offered to help people claim discounts such as the marriage deduction and work-at-home deduction.
Tax Credits Ltd targeted people online and flooded social media sites with enticing advertisements claiming that households could be entitled to hundreds of pounds. Then, for a discount firm to file a claim on someone’s behalf, taxpayers must sign a rock-solid contract known as a “Deed of Assignment.”
This instructs HMRC to send money owed to the company rather than the individual, and can only be withdrawn if the company agrees.
However, Tax Credits Ltd clients were not presented with a copy of this agreement during the sign-up process.
This meant that they were often completely unaware of the terms they were agreeing to, including the fact that the company would collect a 48 percent fee from each payout.
In some cases, people never got a penny back after refusing to send ID to the company.
HMRC stopped claims from Tax Credits Ltd last May.
Some 11,000 customers, whose claims have been held during these investigations, receive their money back directly from the tax authorities.
Affected taxpayers will be contacted at the end of March and refunds will be issued automatically.
HMRC has promised the industry a much-needed shake-up to protect taxpayers.
Meredith McCammond, of the Low Incomes Tax Reform Group, said: “This will send a warning shot across the industry to other tax refund agents.”