Money Wellness
Image of a man opening his post with a letter containing a cheque
category iconbenefits
category iconcost of living
calendar icon06 Sep 2023

Warning about PPI tax refund companies

If you’ve ever made a claim for mis-sold PPI and are on benefits or a low income, you could be entitled to a tax refund, but be aware of third-party repayment companies acting on your behalf, without your knowledge, who could charge you fees of up to 48%.

The warning comes from the Low Incomes Tax Reform Group (LITRG) who has said it has seen a growing number of cases where people had no knowledge they’d instructed a tax refund company, until a cheque dropped through the letterbox, minus the fee taken for chasing and administering the refund.

PPI pay-outs were made up of compensation and interest, charged at 8%. The interest charged was taxable at 20% and deducted by HMRC at source before the pay-out was sent to a customer.

Those on a low income or benefits whose income was within the personal savings allowance are entitled to a refund because they’re not liable to pay tax.

LITRG believes PPI firms have taken advantage of this loophole by either forming or partnering with tax refund companies, now that the deadline for claiming PPI has passed.

People are being caught out by third-party repayment firms because emails and text messages sent to them are vague – asking them to tick a box if they’d like to receive more information on tax refunds, which is then used as authorisation to progress with a claim. Others have been asked to provide a signature onscreen during the PPI process, that’s now being used to populate a tax refund claim form.

While some people prefer to pay a company to act on their behalf, many don’t realise they’ve signed up for this service or the cost involved.

What’s more, the tax refund companies could be acting fraudulently, as HMRC’s own guidelines state that any paperwork submitted should be signed by hand – electronic signatures shouldn’t be accepted.

LITRG has called for the HMRC to investigate the practice and tighten regulations to ensure it only accepts claims from tax refund companies who can demonstrate their customers understand the process and are happy for them to act on their behalf for a fee. They also want the HMRC to stop accepting applications from any companies who fall short in this process.

What can you do if a tax refund company has acted without your knowledge?

If you think you’ve been affected, you should go through old paperwork and agreements to see whether you gave your authority for your data or signature to be used.

Even if you’ve ticked or signed something that purports to give authority, you might want to check that it’s valid with the Information Commissioners Office (ICO), and whether this data includes an image of your signature.

Depending on the outcome of your conversation, you could make a formal complaint with the ICO.

The LITRG group has also advised:

  • Asking HMRC for a copy of the tax refund claim form and check if the document or signature is familiar (in case they did send it to you and you’ve forgotten)
  • If you don’t recognise the document or signature, check your messages or emails for any marketing material with sign up forms/signature software.
  • Make a Subject Access Request to the tax refund company to try to understand more about the sign-up process and how the company used your signature on the form.
  • Tell the tax refund company about your grievance and ask for your money back. They might refuse and only offer you the amount after their fees have been deducted. If you’re worried about accepting this or providing further identity documents, ask the tax refund company to confirm they’re holding your money in a client account so it’s secure before taking further action.
  • Ask HMRC to remove any ‘64-8’ from your record - this form notes the tax refund company as your agent. You can get an agent removed from your record without their agreement.
  • Check if HMRC are the tax refund company’s anti-money laundering supervisor. These companies are required to have anti-money laundering systems in place. If they fail to meet these obligations, penalties and criminal sanctions can be imposed.
  • Make a formal complaint to HMRC setting out why you don’t think they should have paid your refund to a third party.
  • If you’re not satisfied with the reply you get from HMRC, you could consider legal advice.


How do you make a tax refund claim yourself? 

You can make a claim for a tax refund on your PPI interest using form R40. You can either do this online or by downloading and printing off a paper form to send by post. The form can be found at 

LITRG has a guide on its website about how to complete the form –

Avatar of Caroline Chell

Caroline Chell

Caroline has worked in financial communications for more than 10 years, writing content on subjects such as pensions, mortgages, loans and credit cards, as well as stockbroking and investment advice.

Related posts


17 Jun 2024

Reform UK pledge two-strike rule for jobseekers

Reform UK have dropped their manifesto. Find out how their plans could affect your money situation.


17 Jun 2024

Almost 1 million people claimed mental health benefits within 4 years

Mental-health problems are the main driver for health-related universal-credit claims, new data has revealed.


17 Jun 2024

Over half a million more kids to be affected by two child cap in next 5 years

An extra 670,000 children to grow up in poverty over the course of the next parliament unless the two child cap it scrapped. What does it mean for you?


14 Jun 2024

Farage appears to back an end to the two-child benefit cap

Could reform do away with the two-child cap?