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 Google ad and website for Quickly Finance Ltd t/a Fast Track Reclaim, a tax repayment agent, seen on 9 August 2022:
a. The Google ad was headed “Married Tax Relief Checker – Tax Preparation Service Online” and stated “Over 2.4 Million Couples are eligible. Check How Much You Can Claim. Find Out for Free. Claim up to £1200”.
b. The landing page of the advertiser’s website stated, in bold text in a red box, “ARE YOU MARRIED OR IN A CIVIL PARTNERSHIP? You may have paid TOO MUCH tax. Claim a TAX REFUND – up to £1220!” and contained a link to “Check Now”.
Text further down the page stated “FEE EXPLANATION: We work on a NO Win NO Fee basis … If your claim is successful we will deduct a fee 36% inclusive of VAT subject to a minimum charge of £30 inc VAT. Where the value of the rebate received from HMRC falls below £30 inc VAT, we will limit our Fee to the total amount of the rebate received”.
Further text stated “Why Can I Claim Marriage Tax Allowance? You can claim Marriage Allowance if all the following apply: You're married or in a civil partnership. Either you or your partner's Income Tax or income is below your Personal Allowance (usually £12,500). Either you or your partner pays Income Tax at the basic rate, which usually means their income is between £12,501 and £50,000 before they receive Marriage Allowance. Your claim can be backdated for 4 years which means you can claim up to £1220 with a further future savings of £1000's [sic]. A section headed “How Does it Work?” stated “The process is simple. All we need to do is get some basic information when you fill out our online claim form. Once you sign and submit the online form we complete all the necessary work and your dedicated claims handler will contact HMRC to negotiate and secure you the most amount of refund as possible [sic]. As an added bonus your tax codes will be changed meaning you will pay less tax every year, saving an estimated £15,000 over your lifetime.”
Another page of the advertiser’s website, linked by the “claim now” button on the landing page, featured the refund claim process.
Issue
The ASA challenged whether:
1. ads (a) and (b) misleadingly implied the free online tool would confirm whether consumers were entitled to a refund from HMRC;
2. ads (a) and (b) exaggerated the refund payable to the consumer and did not make clear that the advertiser would deduct a fee of 36% of the refund, with a £30 minimum fee, or that consumers could apply for a refund directly with HMRC free of charge; and
3. the ads 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. Quickly Finance Ltd t/a Fast Track Reclaim said that clients who clicked on ad (a) were directed to ad (b) where they were asked six qualifying questions to determine if they were eligible to claim. They were not required to submit personal information or make a payment at this stage. The questions determined that the applicant fell into the correct earnings bracket to be eligible to claim and generated a refund estimate based on the length of their marriage. They therefore believed the claims “Check How Much You Can Claim. Find Out for Free” and “Check now” were accurate and unlikely to mislead.
2. Fast Track Reclaim sent a list of 26 clients who they said had received refunds of more than £1,000. They said those clients had received an average of £1,397. Fasttrackreclaim.com said they had used the figure of £1,220 because it was in line with published and informed advice from consumer groups. They said that they required potential clients to use the online checking tool because it checked whether they were eligible to claim and, depending on the answers given, gave an estimate of the potential rebate.
Fast Track Reclaim said their fee structure was prominently displayed on every page of their website; it was in the same font size as the rest of the text on the page and positioned so that consumers would not have to scroll down to see it. Furthermore, it was headed “FEE EXPLANATION” in a red highlight font. They sent an archived version of their website which included a footnote that stated “Quickly Finance Limited is not part of, nor endorsed by HMRC. Quickly Finance Limited acts as a Tax intermediary only. You do not have to use Quickly Finance Limited to make a tax refund or allowance request.” In response to the complaint, they had immediately amended the website so the statement about fees also stated “You do not have to use Fast Track Reclaim to make a tax refund or allowance request, you could contact HMRC directly” within the fee explanation. They said they would further amend this to state that consumers could contact HMRC for free.
They said ad (a) was limited by space and sent a screen shot showing that Google had not approved a statement making clear that consumers did not have to use a tax reclaim agent because it violated their policies. They said that Google had asked for all references to HMRC to be removed from the ad.
3. Fasttrackreclaim.com said the assignment was detailed in their terms and conditions and allowed them to claim the fee for their service related only to the specific years selected by the client in the online application, and was not applied to any other tax refund or to future tax refunds. They said they would also amend the fee explanation to state “an assignment applies”.
Assessment
1. Upheld
We considered that readers were likely to understand from the ads 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 understood from HMRC that couples who met the criteria could claim the marriage allowance for the current year and the four preceding years. The current allowance was £252 and we understood that the total available across the relevant period was £1,242. We understood that the amount that could be claimed depended on the marital, tax and employment status of the couple, and that there was no financial benefit to couples with certain income combinations. However, we noted that was not made clear in the ads and considered the claims implied that all those eligible would receive some repayment.
In addition, we understood that refunds would be paid to the consumer for a maximum of four backdated years, because refunds due for the current tax year were incorporated into the tax code for that year. We considered that consumers were likely to understand from the ads that they could be issued with a refund up to a maximum of £1,220, which we understood was not the case. We had also not seen evidence to demonstrate that Fasttrackreclaim.com customers received refunds of the advertised amount.
Furthermore, we understood that if clients received a refund from HMRC, the advertiser would deduct fees of 36% of the refunded amount. While we noted that ad (b) featured text stating the percentage fee payable, we considered its size, and placement under the main claims referring to the refund available and invitation to “Check now”, did not give sufficient prominence to a significant factor likely to affect a consumer’s decision to apply for a refund. We considered omitting that information from the ads meant they were likely to mislead, including in relation to the refund amount available.
We also considered consumers were unlikely to be aware that there was a free route to claiming the advertised tax refund, which was also significant information likely to affect how they would respond to the ads. We noted the advertiser’s willingness to amend ad (b) but, because the initial ads did not make clear that consumers could apply directly to HMRC at no cost to themselves, and for the reasons above, we considered they were likely to mislead.
On those points, the ads breached CAP Code (Edition 12) rules 3.1, 3.3 and 3.4.3 (Misleading advertising), 3.7 (Substantiation) and 3.11 (Exaggeration).
3. Upheld
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 advertiser. 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 again noted the advertiser’s willingness to amend ad (b) but considered the proposed change was unlikely to be sufficient to make the commitments associated with an assignment clear to consumers. We also considered that although information about the fee and the assignment process was stated in the terms and conditions, that was not sufficiently prominent given that they were significant factors likely to affect a consumer’s decision to use the advertised service. We concluded that omitting that information meant that the ads 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) and 3.9 (Qualification).
Action
The ads must not appear again in their current form. We told Quickly Finance Ltd t/a Fast Track Reclaim not to make claims about available refund amounts without supporting evidence, and to ensure that they did not exaggerate the likely refunds consumers would receive by omitting to make clear that not every couple would benefit. We told them 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.
