The Low Incomes Tax Reform Group (LITRG) has called on the HMRC to “intervene” after a growing number of people have discovered that they are stuck in a ‘deed of assignment’ when using a tax refund site.
According to the group, people may have signed a deed of assignment which is where a tax repayment is “legally assigned, by deed or letter, to the tax refund company”.
The deeds are used legitimately by tax refund companies in situations where they “want to make sure they get the refund that they have helped arrange, in order that they can deduct their fee”.
However, the group has said that rather than just ask clients to sign a deed of assignment in respect of a specific claim, some tax refund companies are getting people to sign “much wider deeds of assignment” covering multiple past tax years.
LITRG has said this means the company can collect “any other tax refunds due to the taxpayer”. The company will then take a percentage of those other refunds as well.
Victoria Todd, head of LITRG, said: “This is an extremely pressing consumer protection matter that we urge HMRC to intervene in, by for example, only accepting deeds of assignment once they have been verified with the taxpayer or by implementing more rigorous checks to ensure that the deeds are valid.
“While it is entirely legitimate for people to exercise choice and use a tax refund company if they so wish, it is also incumbent on HMRC to ensure people are aware of how they can claim tax refunds directly from HMRC and to make the process as easy as possible, so that they can claim the refunds without having to lose a percentage of the refund due.”