Applying for a tax refund may seem like a chore, but using a ‘rip-off’ refund company can cost you hundreds of pounds.
A billing company is a legitimate third-party company that offers to apply for a tax refund on your behalf.
These companies offer support, possibly in addition to administrative fees, in return for the large sums of cash they win for you.
However, you can easily get a refund free of charge by filing a claim with HMRC.
With them, you could run out of pockets, says Laura Suter, AJ Bell’s head of personal finance.
“Many people who believe they are obligated to get their tax refunds would rather hire a professional to handle their refunds than handle a lot of the paperwork and jargon themselves,” she said. said.
“But there are a lot of rip-off merchants in this market, which means you may get little or none of the taxes you owe back, so you have to be very careful.”
The government is very concerned about fraudulent companies targeting consumers and has launched an investigation on how to better protect households.
Here’s how to avoid using tax refund companies and keep all your tax refunds.
How to spot a “rip-off” tax refund company
There are several ways to find a “rip off” tax refund company.
A big red flag to look out for is the extremely high fees.
Fees that must be paid using the Billing Service must be clearly stated on the Website.
“You don’t have to hand over your details to find out before they know what they’re charging,” Laura said.
If the charges are too high, you should be careful using the service.
“Many agents will say they don’t charge a fee, but instead they’ll take half or more of the tax you charge,” Laura said.
“It’s too expensive and out of proportion to the amount of work they do.”
Be aware if the company requires a fee to transfer money to your bank account.This should not be charged at all.
There is a risk that any tax refunds you earn will be paid directly to the tax refund company you used, not directly to you.
That means the company is paying you what you owe.
But like reader Deborah Ward, it might mean you’re waiting for money.
She is still waiting for a £1,500 PPI tax refund from the tax refund company she used.
How to claim your own tax refund
Businesses that assist in claiming tax refunds are not regulated by the Financial Conduct Authority.
In other words, there is no formal system for filing complaints, and you cannot go to the Financial Ombudsman Service if you have a problem, just like you can with a claims management company.
The best way to get your tax refund is to apply for it yourself.
Check out the HMRC website – you can see tax refunds you can apply yourself without spending a cent.
“Even if taxes can feel a little scary and confusing, the government has made the system easier to navigate. ‘ said Laura.