Martin Lewis issues urgent warning on PPI scams – look out for tax refunds & deed offers | Personal Finance | Finance
Martin Lewis took questions from This Morning viewers today and one elderly saver asked Martin for advice on a common issue. Corinth, a 76 year old, asked for help on PPI payments.
Corinth detailed he received a PPI payment from a company called Entico, who were now requesting a photo ID, a National Insurance number and a utility bill for a tax refund.
Martin was asked if this sounded like a scam or was a legitimate request.
Responding, Martin had the following to say: “I don’t know Entico so I can’t tell you whether it’s a scam.
“Certainly, if you’ve had a PPI payout, most people who have had PPI payment in the last four years are eligible to a tax refund.
“You can do it yourself and there’s free guides online on exactly how you can do it.”
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LITRG explained people may have signed a “deed of assignment” which is where a tax repayment is legally assigned, by deed or letter, to the tax refund company.
Deeds of assignment are used legitimately by tax refund companies in situations where they want to make sure they get the refund that they have helped arrange, in order that they can deduct their fee.
But rather than just ask clients to sign a deed of assignment in respect of a specific claim, some tax refund companies, LITRG argued, are getting people to sign much wider deeds of assignment covering multiple past tax years.
This means the company can collect any other tax refunds due to the taxpayer (usually going back the maximum of four years). The company will then take a percentage of those other refunds as well.
In light of this, LITRG warned people to check terms and conditions carefully before they sign-up with a tax refund company to ensure they fully understand what fees will be collected and what refunds any deed of assignment will cover.
For those that have already signed-up to a tax refund company, LITRG advised people to check with HMRC whether a deed of assignment has been lodged on their record.
If a deed of assignment has been lodged, there is guidance available on LITRG’s website to help people understand whether the deed is valid and what to do.
LITRG said where a refund has been sent to a tax refund company in accordance with a deed of assignment, but there are questions over whether it is a valid deed, a formal complaint should be made to HMRC, because it may be possible to argue that it should not have been accepted by HMRC in these circumstances.
Victoria Todd, the Head of LITRG, concluded: “In the cases reported to us recently, people either did not realise they had signed a deed of assignment at all or thought they were signing it in respect of a specific tax refund only and not for past years. This is a very concerning situation involving potentially vulnerable taxpayers. We urge taxpayers to ensure they are clear about what fees will get collected and what refunds and years any deed of assignment will cover, before they agree to use such companies.
“The word ‘deed’ makes people think of a formal legal document but often the inclusion of a few words on an application pack people are asked to sign will make a valid deed.“For example, when people sign the application pack, they may think they are just giving permission for the tax refund company to act on their behalf. But there may also be some small print saying something such as ‘I unconditionally assign my repayment of tax (for tax years ending 2017/18, 2018/19, 2019/20 and 2020/21) to…. (tax refund company)’.
“Sometimes people may agree to lengthy terms and conditions, within which wording may be buried such as: ‘as part of the process of recovering overpaid tax on your refund, a full reconciliation of your tax position will be carried out.
“This may result in other overpayments of tax being identified and recovered, on which our fee will apply’. This means that the refund company can collect all refunds due to the person even if they have not really helped to organise the refund and are nothing to do with the original service they provided. People need to be aware of this practice.”