HMRC accused of facilitating fraud by firms seeking refunds on behalf of unwitting taxpayers | HMRC

HMRC has been accused of facilitating fraud by paying fictitious tax refund claims submitted on behalf of unwitting taxpayers by third-party agents.

Taxpayers can request a refund if they have paid too much tax. You can hire an agent to do this on your behalf, but some companies collect data from individuals to make false claims.

Tax fraud by fraudulent claims companies has cost the Treasury billions of pounds since 2020, and inadequate controls mean innocent taxpayers face huge bills if claims in their name are later found to be fake. HMRC will reclaim invalid payments from individuals, whether or not they received the discount from an agent.

Jim Mackie, a former police officer and private investigator, says HMRC refused to investigate when his wife's details were used by a tax refund company to lodge a trumped-up £5,000 refund claim on her behalf last year. HMRC transferred the full payment to Lancashire-based firm Waltonbridge, which was said to be Mackie's wife's appointed representative.

“The first time we found out about this was when HMRC wrote and said rebate checks would be sent to the 'agent',” Mackie said. “The claim, submitted in my wife’s name with a third-party signature, related to taxes paid on interest from PPI payments. She hasn’t claimed a PPI payment since 2012 and for this amount of tax to be due she would have had to receive a fantastic £100,000.”

Waltonbridge passed on just over half the money in the form of a check, less a 48% fee, but the Mackies have no intention of cashing it. Instead, they reported the suspected fraud to HMRC, which told them it was satisfied the claim was genuine.

“It relied entirely on Waltonbridge’s word,” Mackie said. “These fraudsters steal hundreds of thousands of pounds a year from HMRC and HMRC are happy to sit back, let it happen and blame us, the public, for false complaints.”

Mackie was ordered by HMRC to report the suspected fraud to the police, who, he said, were unable to investigate because HMRC, not his wife, had suffered financial losses. He said Trading Standards had also refused to take on the case and had now lodged a complaint with the Parliamentary Ombudsman.

Anthea Jones* is among dozens of others who report being attacked by Waltonbridge, a four-year-old company that operates from a hot desk in Bury. She was informed by HMRC that a payment of £1,036 for tax deducted on savings and investments had been transferred to her appointed representative. She said she had made no such claim and had never heard of Waltonbridge.

“At my request, HMRC sent me a copy of the claim form in my name and the signature was not mine,” she said. “HMRC insisted that the signature was genuine and that it should not become involved in any dispute between an individual and an agent.”

Tax brokers are unregulated and campaign organization Low Incomes Tax Reform Group (LITRG) says unscrupulous firms may obtain taxpayers' personal information, including signatures, from PPI claims management firms and reuse it to file new claims without the individual's knowledge.

Details can also be collected through social media advertisements encouraging individuals to check whether they are eligible for tax relief. In some cases, no part of the payout is passed on to the taxpayer on whose behalf the claim is made. LITRG calls on HMRC to take proactive action when fraud is suspected to protect individual taxpayers and the public sector.

“HMRC continues to operate on a process now, check later basis, which allows access to the small number of more unscrupulous tax refund companies,” said Joanne Walker, technical officer at LITRG. “This means that if there are irregularities in the settlement of claims, they may only come to light after several years.”

“HMRC will take action against you for a false tax refund, not the tax refund company. If the tax refund organization withheld a fee before issuing you the refund, the debt you owe to the tax refund agency may well be greater than the amount of the tax refund you originally received.”

The National Audit Office (NAO) is also calling on HMRC to crack down on rogue agents.

A spokesman said: “Regular NAO reports show that improved action is needed across government to have a meaningful impact on reducing fraud and errors, meaning more money is available for government priorities. “

HMRC told the Guardian that confidentiality rules prevented it from commenting on individual companies or informing customers who report fraud whether their complaint is being investigated. If there are “legitimate reasons” to doubt the signature provided by an agent, one must obtain the assurance of the company in question, adding that customers who are dissatisfied with the services provided by an agent must complain to the company.

A spokesman said: “We take fraud reports very seriously and if we know or suspect that a business is not complying with the law, we take a number of measures to address this.” If a customer believes they have not appointed an agent and asks us To review the claim, we will work with them to resolve the issue.”

Since January 30 this year, HMRC has tightened its processes for PPI tax relief claims. Now the taxpayer will be contacted to obtain evidence to support the claim, alerting them to possible fraud on their behalf. Taxpayers who discover that an agent is acting on their behalf without their knowledge can have the agent removed. However, this only applies to claims made after January.

Waltonbridge, which recently closed its website, did not respond to requests for comment.

Bury Trading Standards declined to confirm whether the company was known or not.

* Name has been changed