HMRC urged to simplify tax relief claims process

Increasing numbers of taxpayers are turning to specialist tax relief refund agents due to the intricacies of the tax relief claims process, leading to calls for HM Revenue and Customs (HMRC) to simplify the tax relief regime.

Taxpayers are being charged up to 40p in every pound repaid by their refund agents, with the complexities of the UK tax system leading to greater demand for refunds, including from higher earners who are entitled to claim tax relief on pension contributions and Gift Aid donations; as well as those who have underpaid benefits such as tax credits.

Anyone eligible for tax relief can apply directly to HMRC for refunds dating back up to four years. However, tax bodies have warned that the long-winded process is putting individuals off claiming what they are owed themselves, forcing them towards the growing number of ‘no-tax-rebate no-fee’ services.

Meredith McCammond, technical officer at the Low Incomes Tax Reform Group, believes the HMRC website is failing to direct potential claimants to the relevant forms and tax relief guidance.

“It puts people off having a bash themselves, and so they turn to companies they think have an inside track with the Revenue,” said McCammond.

Anita Monteith, technical director at the Institute of Chartered Accountants in England and Wales (ICAEW) feels it is “a great shame” that so many potential claimants aren’t confident enough in liaising directly with HMRC.

“People will perhaps not be aware when they are being taken for a ride,” said Monteith.

Monteith added that high-volume tax rebate claim specialists have invested more time and money in advertising their services of late, resulting in a new wave of momentum for these firms in the last three years.

Chas Roy-Chowdhury, head of tax at the Association of Chartered Certified Accountants (ACCA), insists people “need to think twice” before engaging a tax rebate firm to claim reliefs on their behalf, labelling it “money for old rope”.

HMRC has responded by claiming it offers “comprehensive information and guidance” on claiming tax refunds.

“HMRC recognises that a number of our customers may use the services of a tax refund agent but they should check very carefully about any fees they may be charged, if they employ someone to act for them.

“Customers who apply directly to HMRC for a tax refund can be assured that if one is due, it will be paid to them in full.”

Last updated: 19th February 2016