Be wary of online tax scams

The internet is packed full of useful information and has revolutionised the way that we work and interact, but with that comes a number of risks. One of those risks is the possibility of becoming a victim of fraudulent activity. For example, have you ever filled in an online survey, usually found on social media channels, to determine whether you are eligible for a tax refund? If you have, then you might have inadvertently signed up for the services of a third party which at best will be expensive and at worst, might result in you also never seeing any of the money owed to you. 

A recent report on the BBC Radio 4 programme Moneybox highlighted how many fraudulent companies are duping the public into inadvertently signing a Deed of Assignment. This is a document which allows a third party to make a tax claim on your behalf. Typically, your accountant would be granted authorisation by completing and asking you to sign a 64-8 form, which provides an instruction to HMRC that you are happy for them to act on your behalf.  

Several pop-up businesses are now using enticing social media posts and asking people to provide personal details under the pretence that they will review their eligibility for a refund. In some cases, they may have actually signed up for a service with hefty charges to pay, often on simple tax issues they could tackle themselves. 

Certain social media platforms, such as Facebook, are swamped with adverts placed by companies, offering to claim back £312 per year if you were an employee who worked from home during the Coronavirus pandemic. Often, these adverts are misleading in that they suggest that a £624 repayment could be reclaimed for the two years (2020/21 and 2021/22), when in reality, it is the tax relief and not the refund that is worth £624. The repayment itself could be as little as £62.40 for each year if you are a basic rate taxpayer and once these companies have deducted their commission, you could be left with very little. You can go onto the HMRC website and make a claim yourself, by providing all of the same information you would to an online firm and if you are owed the money, you will receive it directly, without having to pay an inflated fee to a third party. Due to the way that these companies present the adverts, the public end up believing that the refunds are part of the Covid relief measures. However, the ability to claim has been around far longer but was seldom taken advantage of because most employers offered a fixed place of work, whereas in Covid times, employees were forced to work from home. 

Another common claim is for the married couple’s tax allowance, which many people do not realise is transferable between spouses in certain circumstances. Again, you can go online to the HMRC website and complete the form yourself and submit a claim. 

The key to avoid being duped is to spend a little bit of time researching what you are eligible for. Sometimes it is difficult to make the time and many people say they don’t do it because it is too daunting, but it really is just a bit of simple form filling. 

If you feel you have in some way been duped into filling out a form online and signing up for a service that carries with it an unexpected fee, then where else can you turn to for advice?  

You could try contacting HMRC if it involves tax but given how stretched the service is, this might not achieve the fast result you are looking for. You could also try reporting the business to Trading Standards or the Advertising Standards Authority but you will need to provide evidence and this again could be time consuming and not result in the outcome you are hoping for. At best, they might punish the firm, but it won’t help you to obtain a tax refund. 

You could appoint an accountant to act on your behalf, but given that many refunds are relatively small, most of the repayment may be eliminated by professional fees. 

My best advice is simple: 

1. Don’t fill in anything on social media posts and don’t provide your details to a firm who approaches you unsolicited. 
2. Do your homework and find out (ideally from the HMRC website) or another trusted source whether you might be entitled to a tax refund. 
3. If you believe you are owed a more substantial amount of tax or are having difficulties with managing your own tax affairs, appoint an accountant to act on your behalf. 

If you have any queries related to this article, please do get in touch.