Reclaiming income tax

timborules

Hi Jimmo,

Yes I did wonder this myself. I think it comes down to whether it could be argued that my wife only because aware of this as a direct result of the tax company's work. In theory, I cannot think of a way that they would come to know of this cheque re-issue - they have been removed as a nominee and as far as they are concerned and according to the tax statements, this payment has already been made.

I think this would be an interesting legal situation should they become aware! Perhaps one could argue that HMRC are slightly at fault for sending the cheque to an address vacated over 18 months prior and under her maiden name when they would have known of the address and name change at the time?

jimmo

I think it is fair to say that most people who seek to offer advice on this forum don't think much of the "no-win, no-fee tax refund" merchants but have to begrudgingly respect the fact that they do exactly what they say they will do.
What they do is very simple. They simply ask HMRC to check whether a refund is due. If so, they get their 40%.
In effect, they play on people's ignorance but what is far worse in my view is that both trade unions and employers actually recommend these "agents" to their members/ staff. We can only assume that the trade unions and employers are more interested in receiving a bit of commission than looking after their own people.
To check this out do a simple search on this forum for unison to see that this has been going on since at least 2005
On that basis, you could say that your wife has been legally mugged for her 40% but she signed up for it.
If you think there is a potentially interesting legal situation regarding the £2505.74 then I hope you know a lot more about the law than you do about tax because these people are quite used to chasing what they see as defaulters.

dori2o

jimmo wrote: »

I think it is fair to say that most people who seek to offer advice on this forum don't think much of the "no-win, no-fee tax refund" merchants but have to begrudgingly respect the fact that they do exactly what they say they will do.
What they do is very simple. They simply ask HMRC to check whether a refund is due. If so, they get their 40%.
In effect, they play on people's ignorance but what is far worse in my view is that both trade unions and employers actually recommend these "agents" to their members/ staff. We can only assume that the trade unions and employers are more interested in receiving a bit of commission than looking after their own people.
To check this out do a simple search on this forum for unison to see that this has been going on since at least 2005
On that basis, you could say that your wife has been legally mugged for her 40% but she signed up for it.
If you think there is a potentially interesting legal situation regarding the £2505.74 then I hope you know a lot more about the law than you do about tax because these people are quite used to chasing what they see as defaulters.

I have no respect for them whatsoever and feel that the OFT should be doing more to prevent people being 'conned' by these companies. However, I do have to accept that this is unlikely to ever happen and it's not like they hide their fees in jargon filled small print, in fact they clearly boast about them.

What I personally deplore about thee companies is what the ordinary person does not see, especially with those companies who offer this service with guaranteed 24/48hr payouts.

It is in these cases where the professional attitude of these companies, and their employees (through the fault of the companies training and commission schemes) is called into question.

Obviously by paying out the customer in 24/48hr they are giving the impression they have more power than the ordinary man on the street to 'force' HMRC to issue people refunds of overpaid tax. Obviously this is not the case and the only reason they can give these refunds in that timescale is because they have paid them out of their own coffers, not the governments.

From then on it is a race to get the money back into the companies bank account and earning interest.This is where the professional attitudes of their staff, who are not tax trained but use the fancy jargon they have been taught to use, obviously rewarded with commission based on how quickly they can return the money to the company, go out of the window.

They think nothing of making unreasonable demands (demanding repayments 3 days after posting the claim), wasting the time of advisers by calling 2 or 3 times a day (all these calls made on their very own dedicated helpline which gives them priority towards the next adviser in the telephone queuing system) demanding their cases take priority and making frivolous complaints, again taking up the valuable time of revenue officers and managers who could be dealing with other matters, such as the vast number of repayments and other such letters/phone calls waiting to be dealt with.

Eventually it is obvious that some managers will actually break and get rid of their case in order to bring their complaints to a close.

This however is only how they act for those who have quite simple tax affairs, they stoop even lower for those who are required, or even in some cases not technically required, to complete self assessment tax returns.

You see they are extremely good at forcing you to stay in self assessment all for their benefit, and of course their 40% commission.

The trick is quite good actually and works in two parts.

First they send in a self assessment form even if one is not needed or has not been issued, this is called an unsolicited return. In almost every case the taxpayer is due a refund due to job expenses claims, almost always mileage relief claims.

The return is then processed and low and behold box 3 on page TR5 of the self assessment form http://www.hmrc.gov.uk/forms/sa100.pdf has been ticked. This is quite an ingenious box for these companies, it ensures that the following years self assessment is requested automatically by HMRC as it is telling HMRC that the taxpayer has other taxable income that is not taxed at source, or that further tax is due from, and that the taxpayer does not want his current years tax code altering to collect the tax due from it.

What the refund company do then, once the return has been processed and they have received the calculation, is call HMRC and as they are now registered as agents (the form the taxpayer signs and returns to the refund company acts as a 64-8 authority to nominate an agent) they have almost all the expenses removed from your tax code.

The idea is that HMRC will update your tax code following the receipt and processing of your self assessment form to include the relief for job expenses, so you get the benefit of the relief throughout the year and not have to wait for the year end.

By removing the expenses from the code, or as per their latest trick of giving a 'clients best estimate' (normally approx £50), they are guaranteeing that a refund is due at the year end as the taxpayer is normally someone who incurs business miles year on year.

By ticking the box 3 on page TR5 as described above, they are ensuring a tax return will be issued, that the client will ask the refund company to fill it in as they find it too complicated with too many boxes, and the refund company will claim 40% of the tax relief that the taxpayer should really have gotten throughout the tax year.

Unfortunately most taxpayers are unaware that they are being conned this way, and just see the repayment they get every year and look at it as a 'result'. They got money back off the taxman. They beat the taxman into submission. (add any other neanderthalic quote here)

Nothing delights me more however during my job than when I find out either a) the company has done all the work, but that the taxpayer has called at the last minute to have the refund issued to them and not the 'nominee' (the refund company). I get great joy from telling them during their rather rude progress chasing calls that the taxpayer has phoned and claimed the money for themselves, or b), that in the cases where they have paid out in 24/48hrs, the claim has come in and the taxpayer has failed to disclose an income to them, this income when added correctly to the assessment, means that the £1500 they thought they were getting (of which £900 has already been paid to the taxpayer under their own 24/48hr payout rule) has now been reduced to £15 or something.

Any such call brightens up even the toughest of days.

timborules

Hi Jimmo,

Yes, my wife is a teacher and it was sent to her by NASUWT - unfortunately, when a union or respected body send you something there is a degree of trust that would otherwise not be lent if the mailing was unsolicited. It's fair to say though that most people are not tax experts and when not expecting any sort of refund, an attitude of "well there's nothing to lose" is easy to adopt. And yes, I operate in legal circles so would be fully investigated! Out of interest, now that they have been removed as a nominee, is there any way that taxrebates.com would discover about the cheque?

Dori2o - Thanks, interesting info actually. Same question as above to Jimmo I guess, is there any way that taxrebates.com would discover that a previous cheque was re-issued?

Thanks,
Timbo.

CLAPTON

the legal and technical case I know not

but for 4 years you and your wife neglected your tax affairs

as a result of the flyer from the tax firm you are now to receive some tax back

seems very very clear cut to me.

dori2o

timborules wrote: »

Hi Jimmo,

Yes, my wife is a teacher and it was sent to her by NASUWT - unfortunately, when a union or respected body send you something there is a degree of trust that would otherwise not be lent if the mailing was unsolicited. It's fair to say though that most people are not tax experts and when not expecting any sort of refund, an attitude of "well there's nothing to lose" is easy to adopt. And yes, I operate in legal circles so would be fully investigated! Out of interest, now that they have been removed as a nominee, is there any way that taxrebates.com would discover about the cheque?

Dori2o - Thanks, interesting info actually. Same question as above to Jimmo I guess, is there any way that taxrebates.com would discover that a previous cheque was re-issued?

Thanks,
Timbo.

Assuming they have been removed from the record entirely, i.e you have confirmed that they are no longer authorised to act on your wifes behalf, then they won't get past the security questions stage when they call up, so the adviser a HM<RC would be prevented from accessing the record and providing any further information to them.

FTBFun

Very good post dori2o. I wasn't aware that's what these so-called agents were doing.

If I did anything like that it'd be pretty good grounds for the institutes i'm registered with to bring up disciplinary action.

jimmo

timborules wrote: »

Hi Jimmo,

Yes, my wife is a teacher and it was sent to her by NASUWT - unfortunately, when a union or respected body send you something there is a degree of trust that would otherwise not be lent if the mailing was unsolicited. It's fair to say though that most people are not tax experts and when not expecting any sort of refund, an attitude of "well there's nothing to lose" is easy to adopt. And yes, I operate in legal circles so would be fully investigated! Out of interest, now that they have been removed as a nominee, is there any way that taxrebates.com would discover about the cheque?

Dori2o - Thanks, interesting info actually. Same question as above to Jimmo I guess, is there any way that taxrebates.com would discover that a previous cheque was re-issued?

Thanks,
Timbo.

Dori2o works at HMRC now whereas I retired in 2006 so his answer is better than anything I might say.