Government crackdown on repayment agents

Published: 12th January 2023

So-called repayment agents have popped up all over the place in recent years. It’s virtually impossible to browse social media without seeing an ad asking if you wear a uniform to work, or are you aware that married couples may be missing out on a tax refund of over £1,000, and similar. Of course, there is a genuine niche for such services, but like many other tax-related incentives, the market has been seized upon by fraudsters and rogue agents, and has been open to abuse.

In particular, concerns have been raised that due to the commission-based payment model used by repayment agents, many require customers to direct HMRC to issue the refund to the agent, rather than their own bank account. This makes some sense, as it reduces the risk that the customer simply refuses to pay once the refund is issued. The idea is that the agent will deduct the commission and forward the remainder to the customer. This is obviously open to abuse by agents who simply vanish with the money, but there can be problems even where the agent is legitimate. The small print of many contracts may mean that future refunds are issued to the agent as well, and they may be entitled to deduct further commission even though they have undertaken no further work.

In its response to a consultation, the government has announced that it plans to introduce a number of measures, including voiding of assignments of repayments, requiring repayment agents to register with HMRC, and introducing greater transparency requirements.