Industry welcomes outcome of HMRC consultation into tax repayment agents
12th January 2023
This week, HMRC published the outcome of the consultation they conducted into repayment agents after growing concerns around consumer protection issues, specifically with regard to the terms and conditions involved and a lack of clarity when advertising.
In particular, some repayment agents have come under fire for not making it clear that they are a third party company, not HMRC themselves, whilst others have been accused of using inflated and unrealistic refund amounts when advertising the sums that consumers may be owed by HMRC.
It’s important to note that HMRC also highlighted that many consumers value the service provided by legitimate repayment agents, entering into agreements with full knowledge of their contractual terms and recouping money owed that they may have otherwise failed to access due to the complexity of the tax system.
As a result of their consultation findings, HMRC has actioned the following: -
- Legislation to render void assignments of income tax repayments which will see the removal of Deeds of Assignment.
- The immediate introduction of new transparency requirements for all repayment agents, particularly with regard to clarity that they are not HRMC but a private company.
- Exploring the introduction of mandatory pre-contractual disclosure forms and strengthening checks on repayment agents.
- Undertaking further work to strengthen the evidence that a claim has been made with a customer’s consent before processing it and improving the way in which customers authorise their agent to act on their behalf.
- Requiring repayment agents to register with HMRC as part of wider work to enhance regulatory framework for tax advice and services.
If repayment agents fail to comply, HMRC can refuse to deal with them and pause any claims submitted.
It’s thought that the removal of the Deed of Assignment, in particular, will cause many existing agents who don’t operate with a consumer first approach to close down. M, making an immediate impact with regard to raising standards within the sector.
We were one of the key stakeholders consulted by HMRC during their consultation, and we welcome these findings and believes it will bring positive change for the sector.
CEO of RIFT Tax Refunds, Bradley Post, commented:
The findings of the recent HMRC consultation and their proposed changes will help to raise standards within the industry almost immediately and we thank them for their thorough investigation and the opportunity to contribute to it.
As a result of these changes, those who have been operating on the wrong side of consumer interest will now find it very difficult to continue and this will ensure that only legitimate repayment agents are able to remain within the sector moving forward. .
It’s important that any repayment agent advertises their services clearly and sets consumer expectations accordingly, while operating with the best interests of the customer at heart at all times.
In addition, improvements to the working relationship between HMRC and repayment agents should hopefully streamline the process, reducing waiting times and the backlog of claims being processed, further improving the service provided to the consumer.