UNSCRUPULOUS firms are tricking people out of hundreds of pounds by offering to help them claim tax rebates they are entitled to get for free anyway.

Claims companies are offering to help individuals claim money owed to them by HMRC and charging hundreds for the service.

But you can get the refund yourself for free, without the help of any third-party services.

Consumer watchdog Which? is warning taxpayers not to be lured in by online ads, many of which imitate the HMRC website and then take up to half of the money you are owed.

Its research has found that people are losing out on hundreds of pounds they are owed after being enticed into using third-party companies, which either contact them directly, advertise on social media, or appear in online searches.

A survey of more than 4,000 people found that one in five had been contacted by a tax refund company, heard of one by word of mouth, or come across one online.

Which? is urging consumers not to turn to third-party firms if they believe the taxman owes them money, or risk missing out on hundreds of pounds.

There are plenty of rebates and allowances you can claim for to reduce the amount you owe the taxman or to get money back.

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The term "tax rebate" gets 40,500 Google searches a month, and there are hundreds of firms looking to take advantage of the trend.

Which? counted a total of 208 firms with "tax reclaim", "tax refund", "tax claim" and "tax rebate" in their names on Companies House.

These firms claim to take the hassle out of claims for you but typically take a cut of your money.

This is typically between 25% and 48% of your pay out – but it costs nothing to apply direct through HMRC.

Which? found that when additional service costs are added, customers are sometimes left with less money than the firm which processed their rebate. 

Similar branding

Some third-party firms are using similar branding and language that consumers would usually expect from HMRC, according to the analysis.

This can be confusing and lead people to believe they are dealing directly with the taxman rather than a third-party.

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Which? said it has seen a letter from the firm Rebate Gateway using HMRC’s recognisable teal colour as well as similar fonts and phrases, which could make recipients think they are being contacted by the government department itself. 

A statement from Rebate Gateway in response to the findings said: “While we are unable to agree with any of the points raised, we do endeavour to ensure our clients, and any prospective clients of Rebate Gateway, are fully aware of who we are, and comprehend the services we offer.

“We will actively review all marketing communications that are forwarded to prospective clients.”

Am I owed a tax refund and how do I claim it?

THERE are plenty of reasons why you may end up paying too much tax to HMRC

You could move jobs and be on the wrong tax code, or you might pay too much on a self-assessment tax return.

You may have stopped working and had no taxable earning or benefits for the rest of the tax year, or changed from full-time to part-time work and your tax code not yet updated.

You can claim for a refund or rebate if you pay too much on a self-assessment tax return, for example, or on a redundancy payment.

There is also a Marriage Allowance, that lets a lower-earning spouse transfer some of their tax-allowance to a higher earning partner.

If you are due a tax rebate, HMRC will let you know by sending you a letter called a P800 or a simple assessment letter.

This letter will tell you if you can claim online through the government's website.

If you claim online, the money will be sent to your account within about five days.

Or you can wait for 45 days and the government will send you a cheque in the post.

If you don't receive a P800 and think you have overpaid on your tax you can use the government's income tax calculator to figure out how much you should have been paid.

Unclear fees

Which? looked at 14 companies that either showed up in search results or were flagged by a consumer who had a negative experience.

It found that four out of the 14 companies made no mention of the fees they charge on their main website page or in their FAQs section, but the term "no win, no fee" was used in some cases.

According to the Consumer Rights Act 2015, customers must be charged a ‘reasonable amount’ for a service.

However, for a fully backdated Marriage Allowance claim worth £1,220, some tax refund companies charge nearly half in commission, the research found.

For example, Tax Credits Ltd would take £585.60 on a service fee of 48%

How to claim for the Marriage Allowance

YOU need to tick all the boxes below to be eligible for the Marriage Allowance:

• you’re married or in a civil partnership
• you do not pay Income Tax or your income is below your personal allowance (usually £12,570)
• your partner pays Income Tax at the basic rate, which usually means their income is between £12,571 and £50,270 before they receive Marriage Allowance

Visit the Gov.uk website for more information and to apply.

A statement from Tax Credits said: "We spend a significant amount on marketing and providing access to this potential tax relief.

"In many cases it’s our advertising, not HMRC’s, that makes a person aware of it. We then present the claimant with a simple mechanism to access the potential overpayment of tax.

"Our remuneration is contingent on a repayment being secured, and the amount we retain is reflective of this.”

Which? also found that customers are often asked to sign legally binding contracts called a "deed of assignment" that give a tax refund company permission to make a rebate claim on their behalf.

It warns that, depending on the terms, this could stay in place beyond the initial claim, allowing the company to take a share of tax rebates the customer is owed in the future.

No complaints process

Many of the firms that help claim for tax rebates aren't regulated.

That means there is no official system for complaints and you can't go to the Financial Ombudsman Service if things go wrong in the same way you now can for a claims management company.

Which? is warning people not to fall for ads that appear prominently in online search results, no matter how legitimate they may seem, and to always claim their rebate directly through HMRC .

Jenny Ross, Which? money editor, said: “Our research shows that huge numbers of people are coming into contact with firms seeking to entice them into handing over potentially hundreds of pounds of their tax rebate in unnecessary and hard to justify fees.

“For most people with a rebate to claim, HMRC is the best port of call. Go to its website directly to ensure you aren’t left footing any unnecessary bills.” 

HMRC said in a statement: "We don’t accredit or in any way approve agents and take firm action against any not complying with the law.

"We encourage customers to come to us to make their Marriage Allowance claim. It takes only a few minutes to complete the online application and eligible claims receive 100% of their entitlement.

"It is important that people thinking of using a tax agent are clear in advance about fees and are satisfied they’ll get the service they sign up for."

HMRC figures in 2020 revealed some people had wrongly been taxed after taking cash out of their pension pots.

We've created a guide so you can tell what your tax code means and calculate if you are paying too much tax.

Don't miss MoneySavingExpert Martin Lewis' tips on how you can save thousands of pounds on your council tax.

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