HMRC has been accused of facilitating fraud by paying fictitious tax rebate claims submitted in the name of unwitting taxpayers by third-party agents.
Taxpayers can apply for a rebate if they have paid too much tax. They can choose to appoint an agent to do this on their behalf, but some firms are harvesting details of individuals to make bogus claims.
Tax relief scams by rogue claims companies have cost the Treasury billions of pounds since 2020 and inadequate checks mean that blameless taxpayers could face shock bills if claims in their name are later found to be fake. HMRC claws back invalid payments from individuals regardless of whether or not they received the rebate from an agent.
Jim Mackie, a former police officer and private investigator, says HMRC refused to investigate when his wife’s details were used by a tax refund firm to submit an invented rebate claim worth £5,000 in her name last year. HMRC sent the full payment to the Lancashire-based firm Waltonbridge, which purported to be the appointed agent for Mackie’s wife.
“The first we knew about it was when HMRC wrote and said that rebate cheques were being sent to the ‘agent’,” said Mackie. “The claim, sent in my wife’s name with a signature that was not hers, was for tax paid on interest received from PPI payments. She hasn’t claimed a PPI payment since 2012 and for that amount of tax to be due she’d have had to have received a fantastical £100,000.”
Waltonbridge passed on just over the half the money in the form of a cheque, deducting a 48% fee, but the Mackies do not intend to cash it. Instead they have reported the suspected fraud to HMRC which told them it was satisfied the claim was genuine.
“It relied solely on Waltonbridge’s word,” Mackie said. “These scammers are stealing hundreds of thousands of pounds a year from HMRC and HMRC is happy to sit back, let it happen, then blame us, the public, for making false complaints.”
Mackie was advised by HMRC to report the alleged fraud to the police who, he said, were unable to investigate since it was HMRC, not his wife, who had lost out financially. He said Trading Standards also declined to take on the case and he has now lodged a complaint with the Parliamentary Ombudsman.
Anthea Jones* is among dozens of others who report being targeted by Waltonbridge, a four-year-old company operating from a hot desk in Bury. She was informed by HMRC that a payment of £1,036 for tax deducted from savings and investments had been sent to her appointed agent. She said she had made no such claim and had never heard of Waltonbridge.
“At my request HMRC sent me a copy of the claims form in my name and the signature was not mine,” she said. “HMRC insisted the signature was genuine and that it could not get involved in disputes between an individual and an agent.”
Tax claims agents are unregulated and the campaign body the Low Incomes Tax Reform Group (LITRG) says that unscrupulous firms may be obtaining taxpayer’s personal information, including signatures, from PPI claims management firms and recycling it to submit new claims without the individual’s’s knowledge.
Details may also be collected by ads on social media inviting individuals to see if they are eligible for tax relief. In some cases, none of the payout is passed on to the taxpayer in whose name the claim is filed. LITRG is calling for HMRC to take proactive action when fraud is suspected to protect individual taxpayers and the public purse.
“HMRC continue to operate on a ‘process now, check later’ basis, which allows the small number of more unscrupulous tax refund companies a way in,” said Joanne Walker, a technical officer at LITRG. “This means if there are any irregularities with claims, these may not come to light for several years.
“HMRC will come after you for an incorrect tax refund, not the tax refund company. If a fee has been deducted by the tax refund organisation before they paid you the refund, the debt you have to HMRC may well be more than the amount of tax refund you received in the first place.”
The National Audit Office (NAO) is also urging HMRC to crack down on rogue agents.
A spokesperson said: “Regular NAO reports show that improved action is needed across government to have a meaningful impact on reducing fraud and error, which will mean more money available for the government’s priorities.”
HMRC told the Guardian that confidentiality rules prevented it commenting on individual companies or informing customers who report fraud whether their complaint is being investigated. It said that if there are “legitimate reasons” to doubt a signature provided by an agent, then it seeks assurance from the firm in question, adding that customers who are unhappy with the services provided by an agent must take it up with the company.
A spokesperson said: “We take reports of fraud very seriously and where we know or suspect a business is not complying with the legislation we use a range of interventions to address these. If a customer believes they did not nominate an agent and asks us to review the claim, we will work with them to resolve the issue.”
Since 30 January this year HMRC has tightened its processes for PPI tax relief claims. It now contacts the taxpayer for evidence to support the claim, which will alert them to any potential fraud in their name. Taxpayers who discover an agent is acting on their behalf without their knowledge can have them removed. However, this only applies to claims made after since January.
Waltonbridge, which has recently shut down its website, did not respond to requests for a comment.
Bury Trading Standards declined to confirm whether or not it was aware of the company.
* Name has been changed
