Claiming tax refunds through tax repayment agents

What are tax repayment agents?

Tax repayment agents (or tax refund companies) specialise in getting customers tax repayments (also called ‘refunds’ or ‘rebates’) from HM Revenue and Customs (HMRC).

Between 2021 and 2023 there was growing concern surrounding the activity and practices of some repayment agents. At the time, they were entirely unregulated and HMRC did not have a system to approve or certify them. Since them, successive governments have strengthened HMRC’s powers to regulate repayment agents and sanction those operating in bad faith.

How do tax repayment agents operate?

Tax repayment agents claim rebates on behalf of customers for most types of personal taxes.

Repayment agents can only claim rebates on behalf of an individual taxpayer once a formal agreement has been established. Agents will usually request the authority to receive money from successful claims on behalf of the taxpayer. After the agent collects their fee, they transfer the remainder to the taxpayer. In the past there have been two types of agreements used by agents, called either  either nominations or assignments. Assignments, unlike nominations, are legally binding, and require the consent of both parties to be rescinded. They can no longer be used for income tax repayments.

Nominations

Taxpayers can ‘nominate’ a repayment agent to receive rebates on their behalf. HMRC says that nominations:

• aren’t legally binding

• can be rescinded unilaterally by the taxpayer

• only cover the specific rebate the taxpayer or agent has applied for

• don’t transfer the legal ownership of the repayment to the agent

Taxpayers can create these nominations by filing standard forms (such as form R38 for income tax refunds) or by writing HMRC a letter.

Assignments

In the past taxpayers have been able to authorise agents to receive rebates on their behalf via a ‘deed of assignment’, or ‘assignment’, though they can’t be used for income tax repayments anymore. As explained by HMRC, assignments:

• Are legally binding, and can only end by the agreement of the taxpayer and the agent

• Transfer the legal ownership of repayment money to the repayment agent

• Don’t have to follow a standard format. Regardless of how they are worded, however, assignments cannot cover future tax years.

What was the issue?

Between 2021 and 2023 there was a growth in tax repayment agents advertising their services online and on social media. Often, these advertisements informed taxpayers that they may be eligible for tax rebates.

Alongside, there was an increase in repayment agents operating in misleading and sometimes fraudulent ways. Analysis undertaken by HMRC, the Low Incomes Tax Reform Group (LITRG), and Money Saving Expert in this period showed a growing number of people expressing dissatisfaction with the service provided by repayment agents. Often, the agents’ lack of transparency meant taxpayers only received a fraction of what they were owed by HMRC.

Common issues included:

• A lack of awareness that a customer was dealing with a third party rather than HMRC

• A lack of information provided by agents on their procedures and what they were asking from the taxpayer

• A lack of transparency over the fee structure of repayment companies, which sometimes led to fees as high as 50% of any repayment owed

• People officially engaging a repayment agent by filling an online form, when they thought they were only expressing interest

• People being unaware that they were agreeing to a deed of assignment

What did HMRC do to protect taxpayers?

Successive governments took action to protect taxpayers. Primarily, the Conservative government introduced provisions ensuring assignments received by HMRC from 15 March 2023 would no longer be valid for repayments of income tax. Agents seeking to claim income tax repayments must use nominations instead.

HMRC took further steps in addition to this, such as creating an online form for taxpayers to complain about the services provided by tax repayment agents; and updating its Standard for Agents guidance by introducing new requirements around transparency. HMRC further required all repayment agents involved in income tax or pay as you earn (PAYE) rebate claims to be registered with HMRC as of 2 August 2023.

From April 2025, agents need an “advanced electronic signature” (a secure digital signature) from a client to receive a tax repayment on behalf of that client.

The government also outlined that HMRC can issue penalties, suspend claims, or refuse to deal with agents, as well as work with the police to support investigations when needed.  

Recent developments

Following proposals implemented in Finance Act 2026, tax advisers are mandated to register with HMRC. HMRC’s definition of tax adviser is quite broad, so it includes organisations that would not necessarily describe themselves as giving tax advice, and specifically includes “agent[s] who submit simple repayment claims on behalf of their clients”, unless an exemption applies.

What steps can be taken to protect against poor agent practice?

The LITRG has published useful guidance for taxpayers who may want to engage a repayment agent. The guidance lists things to look out for when using an agent. The guidance also signposts sources of support for people who feel they have been subject to unfair practice. 

Although assignments for income tax repayments are no longer allowed, and the regulatory environment has significantly tightened, taxpayers should exercise caution: if agent practices are not transparent, they may not be aware that they are agreeing to a nomination, meaning their repayment is going to be transferred to the agent instead of them.  

Can taxpayers claim tax repayments without using an agent?

Yes. Taxpayers can claim any repayment on their tax, for free, from the HMRC website, which has a dedicated webpage showing taxpayers how to claim tax refunds.  

Generally taxpayers have four years from the tax year concerned to claim a refund.