Reclaiming income tax

timborules

Hello All,

My wife used a recommended tax refund company (taxrebates.com) I think, not anticipating that she was due any tax back so no harm in trying.

The results came back, HMRC sent statements covering just over a 4 year period and showed that each year she was due a rebate of c.£50-100, bar one year where she was due a rebate c.£1,600.

Apparently, that £1,600 was paid back through PAYE the following year (which we recall) and so the net tax rebate from HMRC (via taxrebates.com) was £54.

My wife phoned HMRC to enquire about the £1,600 (just double checking) and she found out from HMRC that they had previously (tax year 2008/2009) been sent a tax rebate in the form of a cheque of £2,500 (later inspection of the statement for that tax year had a message typed informing that £2,500 already refunded).

We had never received this - it transpired that the cheque was sent to my wife's student residence which she had moved out from.

Anyway, HMRC say they are reinvestigating what happened to the cheque and will re-issue the £2,500 - however, they have said that it will probably have to go through to taxrebates.com as they did the investigation.

Should it go through taxrebates.com (who take a 40% cut)? Can we opt out of this given that this rebate was initially issued back in 2008/2009 and that the cheque was being re-issued?

Any advice would be great - naturally, delighted that we're due any rebate but if we can avoid giving taxrebates.com 40% of it that would be good as the rebate had already been issued....

Thanks,
Timbo.

tyllwyd

Have you checked your contract with taxrebates.com to see if it covers this situation?

timborules

Well the T&Cs are on their website (taxrebates.com - cannot post the link!) but say:

1. The Tax Refund Service operates on a No Refund - No Fee basis.
2. Our fee is 41p for each 1 of refund secured through the use of our service.
3. Where HM Revenue & Customs (HMRC) sends your refund to us, we will deduct our fee from your refund and forward the balance to you. Where HMRC sends your refund directly to you, you are required to notify us in writing within 14 days and forward full payment of the relevant fee to us within 14 days of receiving our invoice.
4. Any omissions or errors must be notified to us within 14 days of receipt of invoice, after which time no amendments or alterations will be allowed, without our agreement. It is your responsibility to check this and advise us accordingly.
5. All services requested are subject to acceptance by us. We reserve the right to reject any client enquiries taken for any reason without explanation.
6. All telephone conversations may be monitored or recorded for training purposes.

I've now had the chance of looking at the tax calculation from HMRC and it says "Repayment of tax - £2567.35, Less tax already repaid for the year - £2,505.74. Repayment due - £61.61.

I would have thought that my wife could 'disassociate herself' with taxrebates.com now that the balance has gone through taxrebates.com and paid to us (minus their fee) and that they cannot backdate a tax rebate that was paid in 2009 but not delivered?

Thanks for all your help :T

le_loup

There is only one thing worse than tax rebate companies, and that is people who foolishly chose to use them and then object to paying the commission!

timborules

I think that comment was rather uncalled for.

You'll note that we have no problem with paying the commission on payments received as a result of their service. You may also note that the question (humbly asked looking for advice, not judgement) concerns actions as a result of our own investigation with HMRC, not theirs, though HMRC inform us that their name is down as our "representative" - hence the enquiry.

dori2o

It all depends on exactly how the company has been registered on your file.

if they are simply an agent or nominee for the refund to be issued to, then you can phone HMRC and advise you no longer wish to be associated with the comany and ask for all future correspondence and refunds to be issued directly to your wife from this point onwards.

However, companies such as this one, and other refund.com companies have gotten wise to this matter and are, without the client (taxpayer) realising, having the client sign a 'deed of assignment' which prevents the money going anywhere but to the refund company. This is normally hidden in the small print of the form that you sign and I'm afraid that if it is the case you have signed such a form, the there is nothing you can do about it, the money legally belongs to the refund company.

Call HMRC and enquire if taxrefund.com is simply a nominee, in which case ask for their details to be removed if you so wish, or if there is a 'deed of assignment' you may need to discuss this with a legal type person.

Please beware that if they are simply a nominee, and you have them removed from the file and any refund issued to yourself, then the company are likely to come calling (in letter form naturally) for their fee. That is upto you to resolve.

timborules

Thanks dori2o that's really helpful. I'll ask my wife to give them a call tomorrow and find out.

Timbo.

DodgyMoney

Rebate companies would have no problem taking your money, so don't have any sympathy for them either!

timborules

OK good news today - my wife spoke to HMRC and though taxrebates.com are a 'nominee' (and now removed as a nominee) they were only a nominee from June 2011 and HMRC said that as the cheque was issued prior to this, the cheque would be sent directly to us and that the cheque would have 'nothing to do with taxrebates.com'.

Hopefully this will all go to plan...!

FTBFun

41% commission. Jesus christ.

Contingent fees are pretty unethical IMO.

jimmo

Playing Devil's advocate for a minute, the terms and conditions say that their fee is " ... .. of refund secured through our service."
Whilst your wife's entitlement to a repayment of £2505.74 was established by HMRC before the "agents " became involved it is clear that she was completely unaware of it and it is also clearly a direct result of the "agents'" claim on her behalf that the repayment has now come to light. The "agents" will definitely want their pound of flesh if they find out about it.
The contract is between your wife and her "agents" and whilst HMRC may well now send the money to your wife it is not for HMRC to interpret that contract.