Alarmed people are complaining to HMRC in their droves about companies claiming tax repayments on their behalf. Complaint numbers about repayment agents have more than tripled since 2020, according to an investigation by BBC Radio 4's Money Box.
In many of the cases complainants say they have no knowledge of the claims and never gave their permission for them to be made. HMRC has accepted there are significant concerns around such companies and the unregulated market they operate in.
The complaints centre around what are known as "deeds of assignment". This is where someone signs over their right to something - usually related to money - to another party to claim it for them.
This is a service that can be performed by legitimate tax repayments companies for people who normally wouldn't have the time or know-how to make such claims. But the unregulated market can be exploited and abused by rogue operations.
A total of 1,808 complaints have been made so far this year. This is more than three times the 545 complaints that were lodged during the whole of 2020.
In some cases people have been contacted by HMRC to say amounts of money are being paid to tax repayment companies. The letters say this has been carried out at the individual's request.
Many of these people have no memory of ever instructing these companies to act on their behalf. Then they have no joy when attempting to contact the firms HMRC say they have paid their money to.
HMRC told the BBC it recognises there are significant concerns around the use of repayment agents. As a result, it launched a review earlier this year on how to better protect taxpayers who use them. It added that it is "analysing the responses to that consultation and considering its next steps".
Joanne Walker from the Low Incomes Tax Reform Group said some companies are "being unresponsive, charging really high fees, making over-inflated promise, having unclear or hidden terms and conditions.
She said: "We've seen a lot of social media advertising and maybe an online inquiry form suggesting someone should check if they're eligible. People might fill in one of these inquiry forms... and there may be a tick box on there.
"Inadvertently, if they tick that box, that might involve signing up to various terms and conditions and in itself will lead to the generation of an application and a deed of assignment even though the taxpayer thinks all they have done is make an inquiry."
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