Tax specialists at the Low Incomes Tax Reform Group (LITRG) have warned taxpayers who use third-party companies to claim tax refunds from HMRC to do so cautiously.

Although taxpayers can apply for a refund directly from the Government, some prefer to use agents to do so on their behalf.

If HMRC decides at a later date that the refund was invalid, however, it can request those taxpayers to repay the full amount plus interest.

As well as requesting repayments from taxpayers, HMRC can also issue penalties. In extreme cases, HMRC may be able to claim overpayments dating back 20 years.

To help taxpayers avoid invalid claims, LITRG has published some key information to consider before applying for a tax refund.

Choose an agent carefully. LITRG stresses that while most refund companies are completely legitimate, others may not be. Taxpayers must carefully read through any terms and conditions set out by a company.

1. Carefully check your claims. Legitimate agents will ask you to provide proof to support your claim, and review it before they submit it .
2. You’re responsible for your tax return. Even if you use an agent, receive payment and settle the agent’s fees, you will have sole responsibility for any repayments to HMRC if your claim is invalid.
3. Do not share your Government gateway details. A good refund agent will have their own software, so you should not need to provide your details.
4. If it looks too good to be true, it likely is. If a company approaches you about a tax refund out of the blue, it may not be legitimate.

Joanne Walker, LITRG technical officer, said:

“If the promise of a tax refund sounds too good to be true, the chances are it probably is. Therefore, it is important that taxpayers think about the risks before using an agent to claim a tax refund on their behalf.”

Contact us to discuss your tax returns.