The letter from HM Revenue and Customs to Pauline King began with the lovely words “You have paid too much tax” and said she was in line for a rebate.
What followed was not so good.
“We will send a cheque to Mortgagesmiths for the amount shown within 14 days”.
Mortgagesmiths claims to help people get “hassle-free tax refunds”.
There are no terms and conditions on its website, though reviews on Trustpilot reveal that it takes a huge 48% cut.
Furious that this company had somehow taken over her tax affairs, Pauline complained to HMRC.
“I have never knowingly given them any permission to access my tax account or conduct financial services on my behalf,” she wrote.
“The signature on the paperwork is definitely not mine. I was shocked that HMRC never checked with me before allowing MortgageSmiths to collect my tax rebate and working from home tax allowance."
The response she got from HMRC left her stunned.
It insisted that the claim form submitted by Mortgagesmiths was valid and told Pauline that the company could only be removed from her account if she could persuade it to voluntarily agree to be taken off.
“Only when HMRC receives written confirmation that the above agent agrees to withdraw from this agreement can we remove them,” HMRC told her.
Pauline replied: “This is extremely unhelpful and unreasonable to put the onus on the individual to force a scam company to write a letter to HMRC requesting their removal.
“For an unscrupulous company to comply with this request will be impossible.”
Pauline, from Aylesbury, Bucks, added: “The refund is only £60.80 but I’m a pensioner, every penny counts.”
Much more was at stake for 26-year-old insurance account manager Jack Earl, from Wivelsfield Green in East Sussex.
He too said he knew nothing about this lot until he got a letter from HMRC saying he was due a £1,134 refund, which was being sent to Mortgagesmiths.
“I saw an advert online about eligibility for a rebate for working from home during Covid,” Jack said. “They took my working history from this advert and faked a signature.
“I never ticked anything to give them permission to act as my agent. We need to expose this horrible company as they are taking money from hard-working people.”
Getting hold of Mortgagesmiths’ director Nasser Mughal, 35, wasn’t easy. The company is not at the address it gives on its website in Manor Mills, near Leeds city centre – in fact, another company at this address said it was getting around a dozen complaints each day about Mortgagesmiths.
The Mirror found its real address nearby and we asked to speak to Mr Mughal. A colleague told us he wasn’t in, even though we could see him playing pool in a communal office area.
Later he responded to my email, though he did not answer questions about how much his company takes in commission, or explain why there were no terms and conditions listed on his website.
"We take any complaints seriously and would encourage anyone who has any such complaint to email complaints@mortgagesmiths.co.uk," he wrote.
“Each client signs electronically and they are made aware that their signature is used to submit the necessary paperwork to HMRC to obtain a refund.
“All clients must agree to our terms of service, which includes our fee structure, before doing so.”
He added that Pauline and Jack had been offered “full resolution”, and claimed Jack now apparently “does indeed remember electronically signing the paperwork”.
“Absolutely not,” Jack said in his response to me. “I told them I remember filling out a form to see if I was eligible for a rebate, but I never signed a form or gave permission for them to act as myagent.”
He was however happy with Mortgagesmiths’ offer to reduce its fee so that he would get £880 of his rebate, telling me: “I owe you a huge thank you”.
Pauline said she’d received a call from Mortgagesmiths and would be getting her whole £60.80 rebate “out of the goodness of their hearts”.
The tax office has admitted there are problems with the third-party tax-rebate industry.
It held a consultation that closed last month and said: “Taxpayers have complained that the scale of the charges are unclear or even hidden, while questions have been raised about how some agents secure agreements from customers.”
One frequently seen issue is the “assignments” used by many rebate firms as part of the sign-up process that mean they legally own the repayment.
The firm then receives the HMRC refund and it is up to them to issue whatever sum is due to their customer. HMRC said it cannot cancel an assignment between a firm and a customer because it’s a legal agreement between the two parties.
Unfortunately, as Pauline King’s case shows, HMRC also refuses to intervene even when a customer complains that an agreement has been faked.
“We recognise there are significant concerns around the use of repayment agents and arecurrently reviewing the processes and documentation for all repayment agents to ensure they lead to valid assignments,” said an HMRC spokesman.
“Customers should be careful when responding to online adverts, check who they are dealing with before handing over personal information, and carefully read the repayment agent’s terms and conditions.”
The findings of the consultation are due to be published in December.
One of the most notorious companies involved in the tax rebate business is Tax Credits Limited.
Last month HM Revenue and Customs said it would be refunding 60,000 people whose rebates were paid to it.
HMRC found customers were not shown terms making clear that refunds would be paid to the company.
In May it stopped sending payments to Tax Credits, which takes a 48% cut in rebates as commission.
Online reviews of the company are overwhelmingly negative, with 98% of respondents on Trustpilot giving it a one star rating.
A report by MoneySavingExpert.com claimed that the company submitted claims without the consent of supposed customers and used forged signatures.
The sole director is Nicola Walmsley, 54, who gives a correspondence address in London. Companies House also lists a “person with significant control” as Barry Brennan, 67, who gives a service address in Cardiff.
“We strenuously deny any allegations of wrongdoing,” I was told in an email that was unsigned.
“Due to continued discussions with HMRC we are unable to comment further at this point. In any event, at no stage have HMRC made allegations of fraud.”
As for the online reviews, the company said: “As we do not proactively request our customers to leave reviews, only the negative ones have prominence.”
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