The Low Incomes Tax Reform Group (LITRG) have issued warnings to taxpayers to never share their Government Gateway username and password details with anyone, including with companies that claim to make tax refunds on their behalf.
LITRG has issued the warning in response to evidence that fraudulent tax refunds were claimed on behalf of self-assessment taxpayers via their tax returns.
What is LITRG?
LITRG is an organisation that aims to make the tax system easier and fairer for all while making tax and tax credit information available to those who may not be able to afford professional advice.
LITRG has been working since 1998 to improve the policy and processes of the tax system, tax credits and associated welfare systems for the benefit of people on low incomes.
Fraudulent claims
According to the reports of the taxpayers who were frauded, the refund company asked them to register for a self-assessment tax return to claim employment expenses. However, the company then used the individual’s Government Gateway login credentials to prepare and submit a tax return which apparently contained inappropriate claims for Enterprise Investment Scheme (EIS) tax relief.
The result of this false claim was the generation of large refunds which were sent to the refund company and a percentage paid to the taxpayer. Upon becoming aware of this, HMRC demanded that the taxpayers in question repay the full amount of the refunds, due to them being incorrectly claimed.
Meredith McCammond, Technical Officer at LITRG, said the following:
“It is entirely legitimate for taxpayers to use tax refund companies to claim refunds on their behalf because not everyone wants to deal with claims themselves and some people would prefer to pay someone to claim on their behalf. But we warn that there are serious consequences of getting caught up with an unscrupulous tax refund company.”
Most who run tax refund businesses are legitimate and provide a helpful service for those who cannot or do not wish to deal with their own claims. However, a legitimate company would never ask individuals for their Government Gateway credentials. Accountants and tax advisors, for instance, would usually apply for agent authorisation which ensures that they can liaise with HMRC on behalf of the client and can file tax returns using their own agent credentials.
What to look out for
The LITRG has issued a list of warnings sign to consider regarding tax refund companies that appear not to be legitimate:
- The tax refund company has been recommended because it gets big refunds (compared to what you might usually expect for the type of refund/circumstances)
- Those who own/run the tax refund company are not members of any professional body
- The tax refund company does not follow basic professional practices
- Communication with the firm is only by phone or text message and/or social media
- The company wants you to set up a self-assessment record with HMRC
- The company wants to use your own personal Government Gateway credentials to prepare and file a tax return, rather than agent credentials
- You are not given a copy of your tax return or tax calculation to approve before submission
- You do not recognise the entries or claims shown on your tax return
Please always be mindful of scams and heed the warnings of HMRC and LITRG if you are considering the use of a tax refund company. Better still, use a professional accountant or tax advisor to handle your tax affairs. Williamson & Croft are well versed in handling matters relating to self-assessment and can deal with everything from preparing your return to claiming any refunds.
Please feel free to contact us at info@williamsoncroft.co.uk if you wish to discuss your self-assessment requirements.