Background
In June 2022, HMRC published a consultation titled “Raising standards in tax advice; protecting customers claiming tax repayments”. As a result of the feedback received, to improve transparency in the repayment agent market and protect customers, the government’s planned steps, included introducing future legislation to render void, assignments of income tax repayments and introducing a new requirement for tax repayment agents to register with HMRC. The effect of such legislation would be that assignments of income tax repayments would have no legal effect and the repayment would remain the property of the customer.
Summary of Council decision:
Three issues were investigated, all of which were Upheld.
Ad description
A paid for Facebook ad and website, www.thetaxhero.co.uk, for a tax repayment agent, seen on 8 August 2022:
a. The Facebook ad showed a National Insurance number card and stated “Breaking News. £3,000 tax refunds being paid on UK PPI claims. 2022 FREE online tool can chek [sic] in less than 60 seconds. Text above the image stated “Can you remember if you paid tax on your PPI refund? If you can’t if doesn’t matter because we can check for you and If [sic] you did you’re likely owed £1,000’s [sic] back from HM Revenue and Customs. Use the FREE online tool below to check now!”.
b. The advertiser’s website included landing pages and claims process pages headed “Your £3,000 PPI tax claim starts here” and stated “If you had a PPI refund, it is likely you paid tax on your settlement when you shouldn’t have. Use this free and easy 60 second check to find out how much you could be owed from HMRC”. A footnote on the landing page linked to the advertiser’s terms and conditions.
Issue
The ASA challenged whether:
1. ads (a) and (b) misleadingly implied the “free online tool” would confirm whether the consumer was entitled to a refund from HMRC;
2. ads (a) and (b) exaggerated the likely refund achievable by consumers and didn’t make clear that a 48% fee (with a £10 minimum) on the final refund applied, or that consumers could apply for a refund directly from HMRC free of charge; and
3. ad (b) made sufficiently clear that consumers were signing an ‘assignment’ that transferred the legal benefit of the claim to the advertiser, which might also relate to other repayments owed to the customer for preceding years (depending on the period set out in the assignment).
Response
1. Phillipson Hardwick Advisory Ltd t/a The Tax Hero said that their online tool was intended to check consumers’ employment status and income, and whether they had received a PPI refund. They said that they would amend future advertising to make clear that the tool’s purpose was to check whether consumers qualified to use their service.
2. The Tax Hero said the government personal savings allowance allowed most taxpayers to earn up to £1,000 a year in interest on their savings without paying tax. Tax was deducted from PPI settlements at a rate of 20%. If the total interest from a settlement and other savings was less than their personal savings allowance, consumers could be due a refund of 100% of their PPI tax. Because tax refunds could be paid for only four years after the end of the relevant tax year, and most PPI claims were settled before the beginning of the 2021/2022 tax year, consumers could make claims relating to three tax years, and could therefore receive refunds of £3,000. They provided names of seven customers who had received refunds of more than £3,000. They acknowledged that not every customer would receive the maximum refund amount and said they would amend their advertising to reflect that. They said that their fees were clearly signposted in their terms and conditions and their website was designed to require customers to read and agree to those.
3. The Tax Hero said information about assignments was clearly signposted in their terms and conditions, which again consumers had to read and agree to. They said that HMRC would no longer process assignments for the period specified by repayment agents such as them, which was previously for up to four years, allowing the agent to benefit from any other refunds owed to the consumer for that period. Instead, assignments could now be processed only for the year that was known to the repayment agent at the time the claim was submitted.
Assessment
1. Upheld
The ASA acknowledged that The Tax Hero was willing to make changes to make clear in future that the online tool assessed users’ eligibility to use their service to apply for a tax refund. However, we considered that readers were likely to understand from the ads, as they appeared, that if they completed the advertised online check, they would be informed whether they were owed a refund by HMRC and how much that was likely to be. While the online tool stated an amount that could be claimed when consumers entered their information into the form, we understood that it simply checked whether respondents were eligible for the advertiser to submit a claim to HMRC on their behalf, rather than being able to accurately estimate the claim amount. We therefore concluded that the ads were likely to mislead.
On that point, the ads breached CAP Code (Edition 12) rules 3.1 and 3.3 (Misleading advertising).
2. Upheld
The ASA considered that readers were likely to understand the references to the amount that could be claimed, including that shown when they entered their details into the online tool, to indicate the amount of refunded tax they would be likely to receive if they used the advertised service. We understood that the amounts available depended on a range of factors, including the size of the PPI pay-out, and how much interest the consumer had earned on the pay-out. Also, we noted that we had not seen evidence that refunds of “£1,000s”, “£3,000”, or any other amount, were realistic.
Furthermore, we noted the ads did not make clear that, if clients received a refund from HMRC, the advertiser would deduct fees of 48% of the refunded amount. Although we noted that ad (b) featured terms and conditions indicating the percentage fee to consumers, we considered that did not give sufficient prominence to a significant factor likely to affect consumers’ decision to apply for a refund and that omitting that information from the ads meant they were likely to mislead, including in relation to the refund amount available.
We also considered that consumers were unlikely to be aware that there was a free route to claiming the advertised tax refund. This was also significant information likely to affect how they would respond to the ads. Because that had been omitted from both ads, and for the reasons above, we concluded that they were likely to mislead.
On that point, the ads breached CAP Code (Edition 12) rules 3.1, 3.3 and 3.4.3 (Misleading advertising), 3.7 (Substantiation) and 3.9 (Qualification).
3.Upheld
The ASA understood that by claiming their rebate via the advertiser’s service, consumers agreed to pay a fee to The Tax Hero, and we understood from HMRC that submitting a claim for a tax refund accompanied by an assignment had the effect of transferring ownership of the benefit of the claim to the tax repayment agent. If there were other claims owing to that customer for the relevant tax year, the assignment would also apply to those, meaning more refunds might be paid to the advertiser (with their fee also applied to them) than the initial claim. We considered that although information about the assignment process was stated in the terms and conditions, this was not sufficiently prominent given that it was a significant factor likely to affect a consumer’s decision to use the advertised service. We concluded that omitting this information meant that the ad was likely to mislead.
On that point, ad (b) breached CAP Code (Edition 12) rules 3.1, 3.3 and 3.4.3 (Misleading advertising) and 3.9 (Qualification).
Action
The ads must not appear again in the form complained of. We told Phillipson Hardwick Advisory Ltd t/a The Tax Hero not to make claims about available refund amounts without supporting evidence and to ensure that their advertising included details of their fees and other significant conditions, including whether an assignment was being used and the implications of that. We also told them to make clear that consumers could apply directly to HMRC at no cost and not to imply that their online tool determined whether consumers were entitled to a refund from HMRC.
