20 February 2023 , 15:54
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A tax rebate firm has been banned by HMRC after it was found to have committed serious anti-money laundering breaches.
Tax Credit Ltd has been stopped from operating as a repayment agent following an investigation.
The firm took 48% of any tax rebate due - despite it being free for you to request your own tax rebate directly from HMRC.
Around 11,000 customers, whose claims had been paused while Tax Credits Ltd was being investigated, will now receive their tax refund directly from HMRC.
HMRC will contact all affected clients by the end of March to explain their refund.
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The refunds will be made automatically – this means customers do not need to contact HMRC to receive their payment.
A spokesperson from HMRC told The Mirror it will be refunding approximately £1.7million, which would mean an average payout of around £154.
Angela MacDonald, HMRC 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.”
It comes after HMRC announced a crackdown against third-party tax rebate agents to protect taxpayers.
Tax rebate firms will now have to register with HMRC and improve their standards so customers fully understand what they are signing up for.
The use of legally binding assignments as part of claiming an income tax repayment will also stop.
Assignments legally transfer the benefit of the taxpayer's repayments to the agent - but they can only be cancelled if the agent and taxpayer both agree.
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HMRC also said it is often the case that the terms and conditions of these assignments are not made clear to the customer.
Under new arrangements, if a taxpayer uses a repayment agent, they will need to make a nomination, which they can cancel at any time.
Stricter rules will also introduce a new 14-day cooling off period when entering into an agreement with an agent, so they can cancel any arrangements.
The Mirror has previously spoken to several people who have u sed tax rebate companies without realising they're not linked to HMRC - or free to use.