HMRC have released a new consultation, 'Raising standards in tax advice: protecting customers claiming tax repayments'. It seeks views on ways in which HMRC can legislate to protect taxpayers from the conduct of some unscrupulous tax repayment agents.

The consultation builds on HMRC's policy in, 'Raising standards in the tax market: professional indemnity insurance and defining tax advice'.

HMRC is exploring ways to protect certain individuals who use repayment agents to reclaim income tax. It follows a number of Tribunal cases whereby agent companies have made false tax claims on behalf of unknowing clients and cases where taxpayers have entered into repayment contracts without fully understanding the agent's terms and conditions.

The consultation seeks views on whether HMRC should:

  • Restrict the use of assignments; under which a taxpayer transfers the benefit of any refund they are to receive to a repayment agent.
  • Introduce measures to ensure that taxpayers see material information about a repayment before entering into a contractual agreement.
  • Require repayment agents to formally register with HMRC.

Replies are requested by 14 September 2022 by:

  • Email: repayments This email address is being protected from spambots. You need JavaScript enabled to view it.
  • Survey form  
  • Post: Protecting customers claiming tax repayments, Agent Policy Team, HMRC, 14 Westfield Road, Stratford, London, E20 1HZ.

Useful guides on this topic

Raising standards in the tax market: professional indemnity insurance and defining tax advice.
HMRC's Summary of responses, ‘Raising standards in the tax market: professional indemnity insurance and defining tax advice’ reveals no plans to introduce compulsory Professional Indemnity Insurance (PII) and a desire to create a legislative definition of 'tax advice'.

Late appeal allowed due to EIS fraud
In J Huntly v HMRC [2022] TC08466, the First Tier Tribunal (FTT) accepted that the delay to the filing of a late appeal was justified due to fraud, COVID-19 and working on offshore rigs. With the late appeal allowed, the case will be joined with nine other victims of Capital Allowances Consulting Limited (CAC).

External links

Raising standards in tax advice: protecting customers claiming tax repayments

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Consultation Questions

  1. What more could HMRC do to make taxpayers aware that they may be eligible for reliefs, and that they can claim directly from HMRC?
  2. What improvements to the process of claiming reliefs could HMRC make that might encourage taxpayers to claim directly?
  3. For taxpayers: What experiences have you had in interactions with repayment agents?
  4. For all respondents: Do you agree with HMRC’s assessments of the issues?
  5. For repayment agents: Do you think HMRC’s assessment of the issues is fair?
  6. For all respondents: Have you seen any other issues with repayment agents?
  7. How should HMRC ensure that repayment agents are adhering to existing consumer rights legislation?
  8. Is there any more HMRC should do to help consumers make informed choices about whether to use a repayment agent?
  9. Should HMRC consider introducing measures which would require repayment agents to display material information before a contract is considered valid, such as a pre-contractual disclosure form?
  10. Should HMRC legislate to restrict the use of assignments?
  11. Should restriction comprise prohibition of the use of assignments of tax repayments or some form of limited restriction?
  12. If limited restriction, do you favour either option b or c as outlined, or do you think another form of restriction would be better?
  13. If you are an agent and use assignments, which areas of tax do you do this in, and why?
  14. If you are an agent, are there any improvements to the nominations process that would make them more appealing?
  15. What impact would a prohibition of assignments have on your business?
  16. What impact would a limited restriction of assignments have on your business?
  17. Do you think prohibiting assignments would address the consumer protection issues cited?
  18. Do you think that restricting assignments would address the consumer protection issues cited?
  19. Should HMRC require repayment agents to register with HMRC via the Agent Services Account before processing any claims they submit?
  20. Should HMRC require repayment agents be authorised by their clients with HMRC before they can submit claims on their behalf?
  21. If you are a repayment agent, what impact would a requirement for formal authorisation by your clients have on your business?
  22. Should this requirement apply only where repayments are paid directly to the agent (including via nomination), or in all cases?
  23. Do you have any other views on the issues or potential measures regarding repayment agents?
  24. Have you seen evidence of a consumer protection issue with repayment agents concerning heads of duty other than Income Tax?
  25. Do you think the measures proposed in this consultation could, or should, apply to other areas in which repayment agents act?
  26. Are there other legal vehicles not mentioned that could give rise to unfair contract terms for taxpayers?

 


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