SALLY SORTS IT: My £1,447 PPI tax refund has been sent to a middleman

In 2019 I applied for a refund of Payment Protection Insurance (PPI) premiums that I’d paid on some loans. I received the money owed with no problems. 

Then, in 2022, I learned I was entitled to a refund of the tax that had been deducted from the payout. So I completed the forms and sent them off.

I heard nothing more until I received a letter in early March, informing me that my tax refund of £1,447 from HMRC would be sent to a company called Tax Reclaim PPI Ltd within 14 days.

I do not recall having any dealings with this firm. I’ve tried calling it but the number is disconnected. 

I’ve sent emails but they just bounce back. Why did HMRC send the money to this firm? And why has it not passed on my refund five months later?

W. D., Newtownards, Co. Down.

Rip-off fees: A reader was left horrified after discovering that her PPI refund was being sent to a third party firm

Sally Hamilton replies: Somehow you have fallen into a nasty trap where a third party can make a claim for a tax refund on your behalf and pocket hefty fees for the privilege, when you could easily have reclaimed it for yourself with no charge.

Money Mail issued a warning about these reclaim firms last year. Indeed, the paper’s investigation helped obtain a £6 million repayment for 48,000 taxpayers who were ripped off by Tax Credits Ltd.

This company offered to help claim tax rebates but did not show clients a copy of an agreement, known as a ‘deed of assignment’, that must be signed by customers before a firm can make a claim to HMRC and receive refunds on their behalf.

I contacted Tax Reclaim PPI Ltd to see what had happened in your case. I tried its phone number first but, like you, encountered a dead line. However, I was luckier with email. 

The firm responded later that same day, saying it had quickly contacted you after my intervention to discuss the situation. It also said that you had signed a contract with it on September 29, 2022, and that HMRC had a copy of this document.

HMRC confirmed to me that it holds a deed of assignment signed by you, authorising this firm to apply for and receive your refund. This meant it could not pay you the refund, even though you had also completed a claim yourself. 

You then told me you had a vague memory of being on a call with someone talking about tax reclaims many months ago, but you did not recall signing anything.

After that you went quiet on me. HMRC would not let me see the signed agreement without your direct consent, which you didn’t provide. I can only assume the firm is telling the truth.

However, even assuming that the authorisation is valid, I pointed out to the firm that five months was an unacceptable period to be sitting on your tax repayment.

I am pleased to say this sparked some action and your refund was organised immediately.

A spokesman for the firm told me a cheque would be sent out, minus its usual service fee of 33.3 per cent plus VAT and a £50 administration fee. 

That would leave you with just £820 of the £1,447 owed, meaning the company has pocketed 43 per cent of the refund amounting to £627.

A few days later, you got in touch with me again with the surprising news that the firm had, in fact, sent you the full £1,447.

No explanation was given for this turn of events, but naturally you weren’t complaining.

The reason those who received PPI windfalls can reclaim tax at all is that statutory interest of 8 per cent a year (not compounded) was added to the payouts.

The interest is treated in the same way as interest paid on savings accounts, which is taxable. But instead of receiving the interest gross, as savers do, 20 per cent tax was taken off the windfall interest at source. 

As most people are entitled to a savings interest allowance (£1,000 for basic-rate taxpayers and £500 for higher-rate), tax would not necessarily be due on the PPI payment, so a reclaim could be made.

Although it was unable to comment on Tax Reclaim PPI Ltd directly, HMRC provided general tips for those who feel they have unwittingly authorised an agent to act for them.

It says customers who believe they did not appoint an agent to reclaim tax should report it to HMRC, as well as to Action Fraud. 

A spokesman says: ‘Where there’s evidence that a repayment agent isn’t meeting our standard for agents, we will investigate them.’

Consumer protection in this area has improved, as claims agents must now register with HMRC, and agreements made since March 15 will not be legally binding. 

This means taxpayers can change their minds and have a refund paid to them instead of to an agent, so long as they let HMRC know before the payment is issued.

Anyone who is due a tax refund on a PPI windfall can make a claim via gov.uk/claim-tax-refund.

TalkTalk wants to charge me for bills

TalkTalk wrote to me in March saying it could no longer send my monthly bill for phone and broadband to my email address. 

Instead, it would have to post it to my home and charge me £2.75 a month for doing so.

No other firm I deal with has a problem contacting me via this address. I’ve used the same one since June 2006 — and TalkTalk has even emailed me about the billing problem via this email.

M. T., Leigh, Greater Manchester.

Sally Hamilton replies: It seems crazy that TalkTalk customer services was able to exchange emails with you over your billing complaint, but its billing department could not issue your regular payment demand to that same email address.

TalkTalk’s initial response to your complaint suggested checking your spam folder, seeing whether the inbox was full and ensuring its email address was in your contacts or safe senders list.

None of these actions was appropriate in your case. Its final suggestion caused me a wry smile. If the others failed, you should contact your email provider: in other words, TalkTalk.

TalkTalk suggested you change your email address. You said you’d rather cancel your contract, as that would cause less hassle than changing an email held by all the companies you deal with.

I asked TalkTalk to look into what had gone wrong. It took a few weeks and a tech expert at TalkTalk spoke to you several times. But it then found the error was due to its billing system marking your email as invalid.

TalkTalk has now corrected this and you have started to receive your bill by email again. As well as refunding the initial £2.75 paper billing charge, TalkTalk added £50 as an apology for its error.

• Write to Sally Hamilton at Sally Sorts It, Money Mail, Northcliffe House, 2 Derry Street, London W8 5TT or email [email protected] — include phone number, address and a note addressed to the offending organisation giving them permission to talk to Sally Hamilton. Please do not send original documents as we cannot take responsibility for them. No legal responsibility can be accepted by the Daily Mail for answers given. 

This post first appeared on Dailymail.co.uk