Taxpayers are being urged to beware third-party rebate companies that use social media to promote their services, then pocket up to half of any rebates you’re owed.
The firms encourage applicants to submit a claim through their agent by suggesting you could receive hundreds of pounds in Government rebates.
However, they can charge up to 48% of any rebate claimed for their services - despite taxpayers being able to request refunds for free from HMRC.
HMRC has just launched a consultation into third-party tax refund firms.
While it did not name any specific companies, it acknowledged that some customers assume these types of services are completely free.
Have you used one of these tax rebate firms? Let us know: mirror.money.saving@mirror.co.uk
Many taxpayers don’t understand the terms they are signing up to and feel misled, HMRC admitted.
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.
In the last week, the Mirror has been bombarded with several examples of companies offering tax rebates on Instagram.
One company, Refundo, which is a trading name of The Claims Guys Legal Limited, suggests taxpayers can get as much as £624 back from the Government if you’ve worked from home during Covid.
In the terms and conditions on its website, it confirms it will takes a 48% chunk of any tax you get back - as does another firm we spotted an advertisement from called Tax Claim Helpdesk Ltd.
Total Tax Claims was another company that popped up on our timeline, charging a fee of 36% of your rebate and a £30 admin fee.
The wording of such firms is often that the service is "free to use" and fails to mention that they will take a percentage of any refund owed to you.
Sarah Coles, senior personal finance analyst at Hargreaves Lansdown, said these types of third-party claims firms are “bamboozling” people into paying for a service.
She said: “HMRC is looking into how it can clamp down on tax rebate firms, but it looks like they’re making hay while the sun shines, and springing up all over social media.
“The risk is that they’re bamboozling people into pay far too much in charges they don’t understand – in some cases to companies they don’t even realise they’re using.
“Right now, HMRC is trying to stay on top of these companies, and stop them publishing anything incorrect – or making it look like they’re affiliated with the taxman.
“However, it admits that with so many firms spring up all over the place, it’s hard to keep on top of it.”
Consumer champion Martyn James added: “Tax rebate firms offer absolutely no value to people, yet because they can buy their way up search drive results and look suspiciously like HMRC linked businesses, they make huge sums from doing something you can do for free.
“I'd like to see this businesses banned, but HMRC also needs to improve it's call waiting times if people aren't going to seek help from third parties.
“Businesses like Facebook need to clamp down on these firms both advertising and exploiting search drives.”
The Mirror contacted all the companies referenced in this article but none responded. We've also reached out to Meta Platforms, which owns Facebook and Instagram.
An HMRC spokesperson said customers "should be careful when responding to online adverts" and "check who they are dealing with before they hand over personal information".
They added: “We strongly encourage customers to make their own claims online at GOV.UK which will ensure they get to keep all of what they are due.
“As part of our work on raising standards in the tax advice market, we have launched a consultation looking at ways to protect taxpayers claiming tax refunds.”
You should always apply for a tax rebate directly for free through HMRC and the GOV.UK website - we've got examples of ways you could be owed tax back here.
