HMRC to refund 60,000 people who had tax rebates processed by third-party firm

Around 60,000 people are due to receive a refund from HMRC after they had tax rebates processed by a third-party firm.

The cash will be given to customers who used Tax Credits Ltd to claim tax back online. Tax Credits Ltd takes 48% of any rebate owed - despite there being no charge for taxpayers to claim a rebate themselves directly through HMRC.

There are wider concerns about third-party repayment firms on the whole, with the UK tax office launching a consultation into these companies back in June, reports The Mirror. In some cases, the websites are designed with the same colours and logos as HMRC to make it look like it is affiliated with the Government.

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They often appear via adverts on social media websites, which customers then assume is a free way to reclaim tax. For a rebate firm to make a claim on your behalf, you must sign an iron-clad contract known as a "deed of assignment".

But an investigation by HMRC found taxpayers looking to put in a claim through Tax Credits Ltd online had not been shown or specifically asked to sign legal documentation. In an update, HMRC confirmed it will issue two different types of refunds to customers of Tax Credits Ltd as a result.

If you made an online claim with Tax Credits Ltd from May 2022, you will get a refund directly from HMRC. This is because HMRC paused payments for all claims submitted by Tax Credits Ltd in May - so any successful claims after this date won't have been paid to Tax Credits Ltd.

If you put in an online claim through Tax Credits Ltd between December 2021 and May 2022, your rebate will have been paid to Tax Credits Ltd. In this case, you should also receive a refund directly from HMRC. All refunds should be paid by mid-November. You won't be eligible for a refund if you made a claim through Tax Credits Ltd using a paper form.

How much you could get back depends on the size of your tax rebate that was claimed by Tax Credits Ltd. Taxpayers can make a claim for a tax rebate directly through HMRC’s free online service on Gov.uk for free. You won’t be charged a fee or have to give up a percentage of your reclaimed tax.

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