A ‘mystery company’ which charged taxpayers significant sums to make claims for tax refunds has been barred from operating.

Tax Credits Ltd (TCL) can no longer trade as a repayment agent after His Majesty's Revenue and Customs (HMRC) found it had committed serious anti-money laundering breaches.

As a result of breaching the regulations, which are predominately designed to prevent businesses being exploited by criminals to launder money, it is now a criminal offence for TCL to trade as a tax repayment agent.

HMRC also said customer’s claims were not paid to TCL, and ‘if a customer is owed relief they will receive this directly from HMRC’.

The move came as a relief for thousands of customers following a series of ongoing complaints that their genuine tax returns were being sent to a third party tax agent, despite no 'official' contract being signed.

HMRC said in January it would introduce new legislation to change the way repayment agents are paid for their services, and better protect customers from what it says is ‘the unscrupulous tactics used by some operators’. 

In an investigation in 2022, we revealed how a woman said she had "no idea" how a cheque from HMRC was being sent to another company, Tax Credits Ltd.

The Blackburn woman, named Jessica, said she was contacted on March 10 by post, receiving an official HMRC letter stating she would be paid back £60.

When she later contacted HMRC to find out when she would be paid, she was told a cheque would be sent to a company called Tax Credits Limited and she would have to take it up with the company.

Since then, dozens of people from across the UK contacted the Lancashire Telegraph detailing how they had lost hundreds and thousands of pounds to Tax Credits Ltd.

At the time there was no registered office address for the company and no contactable phone number.

MORE: Why is HMRC paying tax returns to a 'mystery company?'

MORE: ‘Disgust, shock and anger’ after HMRC pays out money to ‘mystery firm’

Companies House listed an address for Tax Credits Limited at an office building in Cardiff which has not been used “for over a year”.

HMRC itself could not supply a viable contact at the company, and many customers told of being re-directed to an address not used by the company for more than 18 months.

The business centre at that location told us they were receiving 20 calls a day from angry HMRC customers who had been left out of pocket.

Customers who were emailed by the company were asked to forward more personal data, something they are unwilling to do because they felt they had already lost money which belonged to them.

Following this week’s announcement, the HMRC said around 11,000 Tax Credits Limited (TLC) clients, whose claims had been paused during investigations into TCL, will now receive their tax refund directly from HMRC.

HMRC will contact all affected clients by the end of March to explain their refund. The refunds will be made automatically – customers do not need to contact HMRC to receive their payment.

Taxpayers can use repayment agents to make claims for repayment of tax, and while many customers are happy with the service they receive, the HMRC said a large number of taxpayers have complained about the lack of transparency in agents’ processes for signing up clients and high charges for using their services. 

Angela MacDonald, HMRC’s Deputy Chief Executive and Second Permanent Secretary, said:  “TCL have ignored their responsibilities under the anti-money laundering measures designed to protect us all from financial crime.

“We will not allow a small number of bad actors to tarnish the reputation of the whole tax agent sector.

“It is crucial taxpayers understand the entitlements they can claim directly from HMRC and are properly protected from the misleading tactics used by some repayment agents.

"The greater protections we’re bringing in will help to stop people unwittingly losing their hard-earned money to misleading agents.”

In response to public concern, HMRC recently consulted on how to protect taxpayers using repayment agents and unveiled a package of measures last month, which included stopping the use of legally-binding ‘assignments’ as part of claiming an Income Tax repayment, improving agent standards and a requirement for repayment agents to register with HMRC.

HMRC urges anyone thinking of using a tax repayment agent to carefully consider their options when appointing a tax adviser to act on their behalf.

Taxpayers are urged to do their research before committing to anything, and are reminded that they, not the tax agent, are ultimately responsible for their own tax affairs.

HMRC said taxpayers are advised to be particularly careful when clicking on online ads as some unscrupulous repayment agents have made their customer sign-up pages appear to be mere requests for more information.

Anyone who thinks they are owed a tax rebate can make claims direct with HMRC via GOV.UK; they can do this for free and will receive 100 per cent of any refund.

If a taxpayer can show a tax repayment agent has made an invalid claim with HMRC on their behalf, they can contact HMRC

Tax Credits Limited – What happened?

 

  • In May 2022 customers raised concerns over dealings with Tax Credits Limited.
  • Some customers said they received a letter stating that the company was acting on their behalf after they had 'clicked on an advert on social media about tax rebates'.
  • They were then told that Tax Credits Limited was acting their behalf and would be claiming their tax rebates.
  • When customers contacted the HMRC they were told that anyone "wishing to cancel an assignment with a repayment agent must take this up with the company, as it is a legal agreement between the two parties and HMRC is not a party to it".
  • Customers were being re-directed to an address not used by the company for more than 18 months. Companies House would not comment when contacted over the background to Tax Credits Limited.
  • The company had two previous addresses at International House, Churchill Way, Cardiff and Moody Hall Annexe, Moody Street, Congleton, which were changed to the recent address in May and June respectively. Calls to St James’s House were not possible with its telephone number listed as ‘suspended’.
  • Customers spoke of ‘anxiety and worry’ that the company would pocket further claims on their behalf.
  • One customer told of how she had lost £1,600 and despite complaining was told to contact the company herself which is proving to be almost impossible.
  • Another woman revealed how HMRC told her it "had her signature" despite her "never signing anything".
  • Then in January 2023, HMRC said it was changing the way taxpayers who use a repayment agent can receive overpaid tax. It would stop the use of legally binding ‘assignments’ as part of claiming an Income Tax repayment, which could only be cancelled if the agent and taxpayer both agreed to do
  • In February 2023, the HMRC announced that Tax Credits Ltd (TCL) can no longer trade as a repayment agent.
  • HMRC said around 11,000 Tax Credits Limited (TLC) clients, whose claims had been paused during investigations into TCL, will now receive their tax refund directly from HMRC.