Should I trust in TAX REFUND company?

nhp

We've been given a form to fill in by a friend that she said got them some money as a tax refund.
She said that it claimed back any overpayments in income tax and that they got several hundred pounds out of it.

Having read the form, I saw that it said that the company that does this will deduct 40% of whatever they reclaim for you and keep it for themselves! This sounds a little dodgy to me......does anyone else out there know exactly what these companies do that's so special that it warrants keeping cash that's rightfully mine? Or can I do myself the same service by making a few phone calls?? If so, who can I call to get the job done myself???

thanks everyone that posts on this site - I've saved £1000's already thanks to you guys - esp Martin!
Merry christmas to all.

mdbs

A decent book keeper/accountant will do the same job, and do it honestly.

This type of company will not do the work for, lets say £50.00. So I guess they will either have a clause which means you have to actually pay extra, or they simply will not touch you if they dont see enough profit.

I would not touch them, but then I have a good accountant.

bluep

nhp, how easy it would be to claim anything back yourself depends on your personal tax situation. I wouldn't touch a company like this at all.

Say, you are employed with no career breaks/additional income/student periods, then its pretty unlikely that in the las 6 years your tax would have been incorrectly calculated by payroll. If however you have had extra-ordinary events that may have led to you being overtaxed then there are lots of calculators on the net that can help you work it out. The most important thing is for each year to write down everything you earnt - you can then either look on the net and calculate how much tax you think you should have paid and compare that to what you did pay on your end of year certificate (P60) or you can just write to HMRC asking them to look into that year specificially as you are concerned you may have overpaid your tax.

I did this for 3 years around 10 years ago, just wrote the amounts I'd earnt and sent it off for them to look at (as I'd been a student for part of the year and knew that I'd been charged tax as if I'd already used a lot of my personal allowance) and got a hefty refund however you can't get a refund if theres nothing there!!! Plus HMRC will only go back 6 years.

If you are self-employed, then chances are you already know a bit more about how to calculate your tax, or if not, should have a tax adviser anyway!

Don't be afraid of listing what you can then asking HMRC to look into it...although on the other hand (unlikely) they could come back and say you owe them tax!!! lol

CRANKY40

Our tax advisor charges £150 a year for keeping check on my husbands tax affairs and claiming back any refunds due (sometimes dh works out of the country for a period of time which means he isn't liable for tax).

Due to refunds claimed, if we paid the £150 every year until he retires, we would still be in profit. 40% of my husbands refunds would be £2800.....so no, don't touch them. I agree with mdbs for what it's worth.

Middlers

I concur with the above. Do not bother using these companies as you will still have to find all the information requested and put it on their forms so you may as well put it on the correct tax forms and submit them yourself.

amf

DO NOT TOUCH THIS WITH A BARGEPOLE!

I am aware of companies who operate in this manner and the scam usually runs like this;-

1. You sign and date the relevant pages of Self Assessment Tax Returns and pass the otherwise blank forms to the agent with info re earnings (e.g P60s).
2. He fills in the forms claiming unbelievable amounts of work related expenses (normally travelling expenses) which are not legally due. This generates a supposed overpayment for each tax year.
3. If you are lucky HMRC will refuse to process a refund without evidence to support these expenses claims.
4. If you are unlucky HMRC will simply process the Returns and pay out. Your Returns will, no doubt, be selected later for enquiry. Once the false expenses claims are discovered you will have to repay the tax refund, with interest and very likely a penalty for the incorrect Returns. The agent will have disappeared off the scene when he's got his 40% cut, leaving you to face the music alone.

nhp

Thank you all who have posted.
For info, I am not self employed, so I didn't see how my tax could be that wrong. From what you've all said I won't bother!!

My friend got £700 as a payout from this company after the 40% for the company was taken off, so I hope the taxman doesn't come after her!

thanks again all !!!

ManAtHome

It's possible if she does temping work for a very poor agency. If it's anything like Amf's take on it, she is responsible for any information given, and signing a blank return isn't a get-out (my accountant always gets me to sign the completed return just for his records even though it's submitted online).

nhp

No temping work involved. Only permanent employment, no benefits except for child tax credit and family allowance.
I have to say I cannot see how the taxman could have their tax so wrong as to be £1200 out!

It certainly raised my eyebrows!

amf

nhp wrote: »

I have to say I cannot see how the taxman could have their tax so wrong as to be £1200 out!

Ah, but the taxman didn't get it wrong. If you read my original post you will see that this is a scam, revolving around the Self Assessment process Returns now, check later process. It's the check later bit your friend needs to worry about!

paiten

Hi.I looked for this company on the forums to see if they are trustworthy.
My husband got a leaflet about this company through unison.We filled the form out and they have now sent us a letter to say we have a possible claim.I too thought the 40% fee was a bit extreme but as i wouldn't have a clue how to do this or what to do i was just going to send it off with P60,P2 and P11.My husband has been unsure about his tax since we got married 3 years ago as his tax code always seems to end in T.Otherwise we would never have thought to claim.We seem to think they must be ok as Unison recommended them.
So what do we do now?Send off the forms or not bother?
Thanks.