Tax assignments announcement closes window of opportunity
The Low Incomes Tax Reform Group (LITRG) has welcomed the confirmation in today’s Budget that it will render void assignments of income tax repayments with effect from today (15 March 2023)1.
The measure helps to address concerns raised by LITRG about the unacceptable behaviour of some tax refund companies who were found to have been submitting assignments to HMRC which channeled multiple tax refunds to them. In most cases the taxpayer had not signed the assignment intentionally or – in the case of some online applications – had not signed it at all.
The measure was first announced on 11 January 2023 and LITRG had feared that a long lead in time for its introduction would have led to some tax refund agents upping the ante before the assignments loophole was finally closed by legislation.
This announcement is welcomed by the tax group who had warned HMRC that unless the provisions took effect immediately, there would be a flurry of market activity prior to any commencement date.
That would have led to more taxpayers being caught out by unscrupulous agents and would also have placed pressure on HMRC service levels.
Victoria Todd, Head of LITRG said:
“The legislation says that any assignments received by HMRC from today onwards will be void. We assume this means that some tax refund applications that are in the post may need to be re-done if they include assignments rather than nominations2. It is worth adding that HMRC must put steps in place to ensure that they act correctly in respect of nominations, so that bona fide agents do not miss out on their fee3.
“However, these wrinkles are nothing compared to what we might have seen had there been a few weeks or months lead in time – huge campaigns to try to generate work, aggressive sales tactics to try and get partially completed applications over the line etc; meaning more taxpayers would have been affected.
“We applaud HMRC – once they accepted the fact that there was a serious problem with the opaque processes of some agents – in acting strongly and decisively. We hope to see similar responses to other issues in this area. For example, with regards to certain activities in the PPI claims sector4, and those agents who exploit HMRC’s process now/check later self-assessment system to make inaccurate or inflated claims.5
“We will be glad to no longer be hearing of people affected by assignments – and about the significant impact this had on their mental health and well-being. However, unless HMRC continue to monitor the situation carefully, taking robust action swiftly if issues like this are identified by them or brought to their attention by taxpayers and other stakeholders, it is likely these queries will get displaced by others.”
