The Government has published a summary of responses to the consultation on raising standards in tax advice: protecting customers claiming tax repayments.

The Low Income Tax Reform Group and HMRC have previously published warnings about the use of agents to claim tax rebates, in particular High Volume Agents (HVAs). HVAs are private companies that deal with large numbers of clients and make requests for repayments, or submit returns that generate repayments, on the taxpayer’s behalf. Please see our earlier Bulletin.

In June 2022, the Government published a consultation to consider ways to better protect taxpayers from repayment agents who take excessive amounts of their tax repayments. Please see our Bulletin on this. Following the responses, the Government says that it will take further steps to tackle the issues outlined in the consultation, including:

1. Legislate to render void assignments of income tax repayments;
2. Immediately introduce new transparency requirements for agents in the HMRC Standard for Agents;
3. Explore introducing mandatory pre-contractual disclosure forms, and strengthen checks on repayment agents;
4. Undertake further work to strengthen the evidence that a claim has been made with a taxpayer’s consent before processing it so we can improve the way in which taxpayers authorise their agent;
5. Introduce a new requirement for repayment agents to register with HMRC as part of wider work exploring options to enhance the regulatory framework for tax advice and tax services.

You can read the full responses here.

Comment

Clients need to be made aware of the potential of this type of fraudulent activity. This might also provide an opportunity to remind clients how to make a tax reclaim from HMRC, in particular higher rate tax on a (relief at source) pension contribution made by a higher rate taxpayer. Please see HMRC’s guidance on how to claim a tax refund.

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