HMRC has introduced new evidence requirements for tax relief claims on employment expenses, a move that should stop fraudulent tax refund companies from taking advantage of low income taxpayers.
The new rules came into force on the 14th of October and mean that most taxpayers who want to claim tax relief on employment expenses will be required to complete a paper P87 form and will need to provide HMRC with evidence that shows they are eligible to claim the relief.
It will no longer be possible to make a claim for employment expenses online or over the telephone, however, a limited online service will be launched on the 31st of October to support those who want to claim tax relief on flat rate expenses, such as uniforms and tools.
The changes have been very much welcomed by the Low Incomes Tax Reform Group (LITRG) which is using the news to remind taxpayers to be careful if they decide to pay a tax refund company to manage these claims on their behalf.
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Joanne Walker, Technical Officer at LITRG, said, “HMRC have been concerned about a rise in ineligible claims for tax relief on employment expenses and so this is a welcome step that should make it harder for unscrupulous tax refund companies to game the system and provide some protection for taxpayers.
“It might seem counterintuitive that HMRC are reintroducing a paper process when they want taxpayers to interact with them online, but doing this means that, rather than waiting until their IT systems can catch up, they can get to work to weed out false claims for tax relief and ensure that eligible claims are paid out.
“Some people choose to use a tax refund company to help them claim a refund because they do not understand or have the time to do the paperwork themselves. That is a legitimate choice. There are many reputable companies that can help but sadly, there are some who take advantage of taxpayers.
“Our advice to taxpayers is to think about the risks before using a refund company and to take steps to understand more about how the company operates before asking them to act on their behalf.
“So, if the promise of a tax refund sounds too good to be true, it probably is.”
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