CLAIMING tax refunds can seem like a chore – but using ‘fraudulent’ recovery companies could cost you HUNDREDS of pounds.

Claims companies are legitimate third-party companies that offer to claim tax refunds on your behalf.

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These companies offer help in exchange for much of the money they have recovered for you, plus an additional administration fee in some cases.

But you can easily get the refund yourself for free by filing a claim with HMRC yourself.

Using them could cost you money, said Laura Suter, AJ Bell’s chief personal finance officer.

“Many people who think they are entitled to a tax refund would rather hire a professional to handle the claim, than wade through a lot of paperwork and jargon themselves,” she said. .

“However, many fraudulent merchants operate in this market, which means you could end up recouping very little – if any – of the tax owed to you, so you need to be very careful.”

The government is so concerned about rogue companies targeting consumers that it has launched an investigation into how to better protect households.

Here’s how to avoid using a tax collection company – and keep ALL of your tax refund.

How to Spot “Rogue” Tax Collection Companies

There are a number of ways to spot “rogue” tax recovery companies.

The big red flags you should watch out for are exorbitant fees.

Any fees you should have to pay using a claims service should be clearly stated on their website.

“You shouldn’t have to give your details to find out before you can find out what they charge,” Laura said.

If the fees are too high, you should be wary of using the service.

“Many agents will say they don’t charge any fees, but instead take half or more of the fee you collect,” Laura said.

“It’s too high and not commensurate with the amount of work they will be doing.”

Be careful if a company charges you a fee for transferring the money to your bank account — you shouldn’t be charged at all, Laura added.

There is a risk that any tax rebate earned will be paid directly to the tax collection company you used – not directly to you.

This means that you rely on the company to pay you what is owed to you.

But that could mean you’re waiting for your money, like reader Deborah Ward.

She is still waiting for her £1,500 PPI tax refund from a tax recovery company she used – and does not know if she will get the money back.

How to claim tax refunds yourself

Companies that help claim tax refunds are not regulated by the Financial Conduct Authority.

This means there is no formal complaints system and you cannot go to the Financial Ombudsman Service if things go wrong in the same way as you currently can for a claims management company .

The best approach to getting a tax refund is to apply for it yourself – and avoid being left out of pocket.

Check the HMRC website – you will be able to see which tax refunds you can claim on your own without spending a dime.

“Even if you find the taxation a little scary and confusing, the government has made the system much easier to navigate and you generally only need a few pieces of information to access the system and determine if you are eligible for a refund. tax,” Laura said.