Adverts from three tax repayment agents have been banned by the Advertising Standards Authority for exaggerating the refunds payable to consumers.
The ASA said that all three advertisers, Phillipson Hardwick Advisory, Quickly Finance, and Total Tax Claims, misleadingly implied that their free online tools would confirm whether customers were entitled to a refund from 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, the ASA explained.
Two of the three advertisers, Quickly Finance and Phillipson Hardwick, failed to make it clear that, in using the 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.
The ASA stated that this work sat alongside action being taken by HMRC who, last year, published a consultation, “Raising standards in tax advice; protecting customers claiming tax repayments”, on how to protect customers and increase transparency around claiming tax repayments.
The feedback to the consultation, which was published in June 2022, encouraged the government to plan steps to improve transparency in the repayment agent market and project customers.
It’s vital consumers understand what they’re getting into.Miles Lockwood, the Advertising Standards AuthorityThese steps included introducing future legislation to 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 said that it supported the decision and, by working in partnership with HMRC, the agency said it would ensure advertisers were treating customers fairly by not misleading them about these services.
Advertisers need to make clear that, in consumers appointing an agent to claim a tax refund on their behalf, they were nominating any due repayment to be sent to the agent, and they mustn’t contain any misleading claims about eligibility.
ASA director of complaints and investigations Miles Lockwood 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.”
Lockwood added the rulings made it clear to tax repayment agents they needed to provide “transparent information” about these services and avoid misleading consumers and agents needed to make it clear what costs were associated with their services, and whether the legal benefit was 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,” Lockwood added.
Jonathan Athow, HMRC's director general for customer strategy and tax design, added: “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 per cent of any money due.”
tom.dunstan@ft.com
