ASA takes action against tax repayment agents

May 31st '23

As part of the Advertising Standards Authority (ASA) commitment to protect consumers from misleading ads, they have banned ads from three tax repayment agents for various claims about their businesses that were unclear including failing to clearly state that customers who used the service would be signing over the legal benefit of their repayments to the agents.


All three advertisers misleadingly implied that their free online tools would confirm whether customers were entitled to a refund from His Majesty’s Revenue and Customs (HMRC). The ads exaggerated the refund payable to consumers, as well as not making clear that the agents would deduct a fee from the refund, and two of the three advertisers failed to make it clear that, in using these services, customers would be transferring the legal benefit of their claim to the advertiser, which could have an impact on other repayments owed to them for preceding years.


This work sits alongside action being taken by HMRC who, last year, published a consultation on how to protect customers and increase transparency around claiming tax repayments. New legislation will end the use of legally binding ‘assignments’ which consumers could only end if both they and the agent agreed to do so, and which allowed agents to file claims (and take fees from) repayments outside of their initial terms of the agreement without the customer’s request.


The ASA support this decision, and by working in partnership with HMRC they’re doing their part to ensure that advertisers in this sector are treating customers fairly by not misleading them about these services. They need to make clear that, in consumers appointing an agent to claim a tax refund on their behalf, they are nominating any due repayment to be sent to the agent, and they mustn’t contain any misleading claims about eligibility.


Miles Lockwood, Director of Complaints and Investigations at the ASA, said: “Financial services like those offered by tax repayment agents can be highly complex, and it’s vital consumers understand what they’re getting into. That’s why we’re pleased that HMRC is bringing in timely legislation to tackle this issue and increase clarity and trust.  We will continue working in partnership with HMRC on this issue.


“These rulings make it clear to tax repayment agents that they need to provide transparent information about these services and avoid misleading consumers. They need to make it clear what costs are associated with their services, and whether the legal benefit is transferred from the consumer to them.


“We’re monitoring the situation, and we’re considering further enforcement action in this space in the near future.”


Jonathan Athow, HMRC’s Director General for Customer Strategy and Tax Design, said: “The ASA’s rulings will help stop firms from issuing misleading advertising about tax refunds. This is another step taken in tackling unscrupulous agents.  …  “People should be cautious about promises of easy money – if it sounds too good to be true, it probably is. Customers can claim tax refunds directly from HMRC, ensuring they get 100% of any money due.”


Source: ASA


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