Page last updated at 00:00 GMT, Friday, 19 December 2008

Reclaim firms rake in customers

By Ian Pollock
Personal finance reporter, BBC News

Web site of the Entitlements Agency Ltd
The Revenue is keeping a close eye on these sorts of businesses

Thousands of parents are paying claims management firms to reclaim a now defunct tax-allowance, even though they could do it themselves.

The attraction is that anyone who is actually due tax will be sent up to either 529 or 1,048, depending on when a child was born.

Back-dated claims for the old Children's Tax Credit must be made by 31 January 2009.

Anyone can do this by contacting the HM Revenue & Customs themselves.

"It is a sad reflection on HMRC that it has failed to get out the information that it is sitting on tax to hand out," said John Andrews of the Low Incomes Tax Reform Group (LITRG).

"I think it would be good for HMRC to publicise the fact that the last opportunity to claim this allowance is the end of January 2009."

Claims firms

One claims management firm, The Entitlements Agency Ltd, says some people get nowhere with an approach to the HMRC.

I have received 500 to 600 [claims] a week and I have written 50,000 in repayment cheques so far
David Brennan

The agency was set up by David Brennan, using a website - - to advertise his services.

His pitch to potential customers is that he will handle claims on their behalf for the complicated tax allowance called the Children's Tax Credit.

This was targeted at basic rate tax payers with children and existed for just two years between 2001 and 2003 before being replaced by the current tax credits system.

Mr Brennan says there are lots of potential customers.

"We have 6,000 claims in the system and they have boomed in the last couple of weeks," he said.

"I have received 500 to 600 a week and I have written 50,000 in repayment cheques so far," he added.

Forms and charges

Mr Brennan's business is one of a plethora of similar ones who advertise online.

HMRC form for reclaiming childen's tax credit
This claim form is available on the HMRC website

He set up his business earlier this year and is registered at Companies House, with the Information Commissioner, and with the Ministry of Justice as a claims handling service.

Despite all this, the Revenue takes a dim view, arguing that anyone can download its form 11 CTC from the HMRC website, fill it in, and send it off.

"People don't even need to use the form," said a Revenue spokesman.

"They can just send us a letter with their address and national insurance number."

It thinks most people received the benefit of the children's tax allowance the first time round anyway and said it was "very unlikely" a repayment would be due for 2002-03.


Mr Brennan makes it clear he deducts 94 plus VAT from any successful claim he processes, plus any interest that HMRC may refund the claimant.

We get lots of people coming to us for our help after trying to claim from the Revenue directly
David Brennan

And he acknowledged that about 75% of claims have been unsuccessful because the claimant either received the money when it was first on offer, or was never eligible in the first place.

Some aspects of his website may raise some eyebrows.

• The banner heading on the front page copies the style of a letter from HMRC, which may give the casual reader the impression the website has official support.

• The site might give some readers the impression it is an official government agency by calling itself, on its front page, The Entitlements Agency, rather than The Entitlements Agency Ltd, which is its full name.

• The website's front page fails to name the relevant tax allowance (children's tax credit) which it is inviting people to reclaim using its service.

• It inaccurately claims that this tax relief was "never advertised" by the Inland Revenue.

Helping people

When Mr Brennan was questioned by the BBC he admitted that some of the wording on his website might need to be changed.

We are monitoring the activities of these agencies very carefully
HMRC spokesman

"I need to check and change that," he said.

"I may change that sentence to 'poorly publicised'," he added.

But he defended the basic message of his business - that unclaimed tax is available which some people just do not know about.

"A lot of people say they have never seen any publicity about this allowance," he said.

"We get lots of people coming to us for our help after trying to claim from the Revenue directly."

Personal details

The site invites potential claimants to sign a form appointing the business as an authorised agent to deal with HMRC.

But this means in future all letters about your tax affairs, not just this claim, will be sent to the Agency, until you cancel the arrangement.

"There must be 30 or 40 tax refund companies that do the same - it is standard procedure," said Mr Brennan, although he said he had no desire to represent a customer once their claim had been settled.

He also asks people to reveal a large amount of personal information, which could potentially expose them to identity fraud if it was lost.

Among the details are names, date of birth, national insurance number, current address, phone numbers, children's names, and tax code for 2002/03.

"All that information is needed to make the claim," Mr Brennan said.

The Revenue said it was keeping a careful eye on tax reclaim agencies.

"[We want to] ensure that no Crown copyright is being infringed and that no incorrect information is being provided which could lead customers to believe an entitlement exists when there is none," said a spokesman.

"Where we have any concerns about the accuracy or competency of 2002/03 child tax credit claims we have already spoken directly to a number of agents offering this reclaim service," he added.

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