HMRC to refund 60,000 people who used third-party firm to claim tax rebate - check if you are owed money

HMRC is refunding 60,000 customers who had tax rebates processed by a third-party firm.

Anyone who used Tax Credits Ltd to claim tax back online will be given money after the UK’s tax office raised concerns about its practices in a new statement published this week. Tax Credits Ltd takes 48% of any rebate owed despite there being no charge for taxpayers to claim a rebate themselves directly through HMRC.

For a rebate firm to make a claim on your behalf, you must sign an iron-clad contract known as a “deed of assignment”. However, 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.

As a result, HMRC has confirmed it will issue two different types of refunds to customers of Tax Credits Ltd.

In an update last week, HMRC said: “A large number of taxpayers who have reclaimed tax payments using the repayment agent Tax Credits Ltd since December 2021 will be due a direct refund from HMRC. HMRC has found that up to 60,000 clients of the repayment agent Tax Credits Ltd signed up through a new online process.

“The company introduced the process in December 2021 and following an investigation, HMRC was not satisfied that the new process and documentation led to a valid assignment of repayments to Tax Credits Ltd.

“There was insufficient evidence within the process of the client’s intention to assign ownership of their refund to Tax Credits Ltd, including clients not being shown the documentation or being specifically asked to sign the page.”

The statement added: “HMRC will now make payments directly to affected clients.”

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. 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.

You won’t be eligible for a refund if you made a claim through Tax Credits Ltd using a paper form.

When and how will the refunds be made?

HMRC will directly refund all affected clients of Tax Credits Ltd and will write to them explaining their refund. All refunds will be made automatically, and Tax Credits Ltd clients do not need to take any action to receive their money.

The process for making refunds to affected taxpayers whose claims have been paused since May will begin immediately. All refunds are due to be made by mid-November.

For claims already paid by HMRC to Tax Credits Ltd (those made between December 2021 and May), taxpayers who have received payment, minus fees, from Tax Credits Ltd can also expect to receive their direct refunds from HMRC by mid-November.

How much money could I get back?

How much you could be due 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.

You won’t be charged a fee or have to give up a percentage of your reclaimed tax.