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

In 2019, I applied for a refund of the PPI (Payment Protection Insurance) premiums I paid for some loans. I received the money owed without any problems.

Then, in 2022, I learned that I was eligible for a refund of the tax deducted from the payout. So I filled out the forms and sent them off.

I heard no more until I received a letter in early March advising that my £1,447 tax refund would be sent by HMRC to a company called Tax Reclaim PPI Ltd within 14 days.

I don’t recall doing any business with this company. I tried to call but the number is unreachable.

I’ve sent emails but they just keep coming back. Why did HMRC send the money to this company? And why has my refund not been forwarded five months later?

WD, Newtownards, Co. Down.

Scam Fees: A reader was shocked to learn that her PPI refund was being sent to a third-party company

Sally Hamilton answers: You’ve somehow fallen into the awkward trap of allowing a third party to file a tax refund claim on your behalf and incur high fees for doing so, when you could have easily reclaimed the tax refund for yourself at no cost.

Money Mail issued a warning about these reclamation companies last year. In fact, the newspaper’s investigation helped secure a £6million payback for 48,000 taxpayers covered by Tax Credits Ltd. were cheated.

This company offered to assist in applying for tax refunds but failed to show customers a copy of an agreement, known as a ‘deed of assignment’, which customers must sign before a company can make a claim with HMRC and in their name can receive refunds.

I have contacted Tax Reclaim PPI Ltd to find out what happened in your case. I tried the phone number first, but just like you, I hit a deadline. However, I’ve had better luck with email.

The company replied later the same day to say that after my intervention they quickly contacted you to discuss the situation. It also stated that you had signed a contract with the company on 29 September 2022 and that HMRC had a copy of that document.

HMRC has confirmed to me that they have a deed of assignment signed by you authorizing them to apply for and receive your refund. This meant that the refund could not be paid out to you, even though you had applied for it yourself.

You then told me you had a vague recollection of phoning someone many months ago about tax refunds, but you couldn’t remember signing anything.

After that you became quiet to me. HMRC would not let me see the signed agreement without your direct consent, which you have not given. I can only assume that the company is telling the truth.

But even assuming the permit is valid, I advised the company that five months was an unacceptable amount of time to wait for a tax refund.

I am pleased to report that this has triggered some action and your refund has been organized immediately.

A spokesman for the company told me that a check would be sent minus the usual service charge of 33.3 per cent plus VAT and a £50 administration fee.

That leaves you with just £820 of the £1,447 owed, meaning the company scoops 43 per cent of the £627 refund.

A few days later you got back to me with the surprising news that the company had indeed sent you the full amount of £1,447.

No explanation was given for this turn of events, but of course you didn’t complain.

The reason those who have received PPI coincidences can claim back taxes at all is because statutory interest of 8 percent per annum (uncompounded) has been added to the payouts.

The interest is treated like interest on savings accounts and is taxable. But instead of receiving the interest gross, as savers do, 20 percent tax was deducted from the unexpected interest at source.

As most people are entitled to a savings interest allowance (£1,000 for base rate taxpayers and £500 for higher rate taxpayers), the PPI payment would not necessarily be subject to tax, so a refund would be possible.

While it was not possible to comment directly on Tax Reclaim PPI Ltd, HMRC did provide general advice for those who feel they have unwittingly authorized an agent to act on their behalf.

It states that customers who feel they have not engaged an agent to reclaim tax should report this to both HMRC and Action Fraud.

A spokesman says: “If there is evidence that a redemption agent does not meet our standards for agents, we will investigate it.”

Consumer protection in this area has improved as claims adjusters are now required to register with HMRC and agreements made since 15 March are not legally binding.

This means taxpayers can change their mind and receive a refund in itself instead of to an agent, provided they tell HMRC before paying.

Anyone who is entitled to a tax refund for a PPI random prize can claim via gov.uk/claim-tax-refund.

TalkTalk wants to bill me

TalkTalk wrote to me in March that my monthly phone and broadband bill could no longer be sent to my email address.

Instead it would have to be mailed to my home address and charge me £2.75 a month for it.

No other company I deal with has had trouble contacting me through this address. I’ve been using the same since June 2006 – and TalkTalk even emailed me about the billing issue through that email.

MT, Leigh, Greater Manchester.

Sally Hamilton answers: It seems crazy that TalkTalk customer service was able to exchange emails with you about your billing complaint, but the billing department couldn’t send your regular payment request to the same email address.

TalkTalk’s initial response to your complaint was to check your spam folder to see if the inbox is full and to make sure the email address is in your contacts or safe senders list.

None of these measures were appropriate in your case. His last suggestion made me smile crookedly. If the others have failed, you should contact your email provider: in other words, TalkTalk.

TalkTalk has suggested that you change your email address. You said you’d rather cancel your contract as it would be less hassle than changing the email address of every company you work with.

I asked TalkTalk to find out what went wrong. It took a few weeks and a TalkTalk tech expert spoke to you several times. However, it was then discovered that the error was due to the billing system marking your email as invalid.

TalkTalk has now fixed this and you will again receive your invoice by email. TalkTalk not only refunded the original £2.75 billing fee, but added an additional £50 to apologize for the error.

• Write to Sally Hamilton at Sally Sorts It, Money Mail, Northcliffe House, 2 Derry Street, London W8 5TT or email sally@dailymail.co.uk – include phone number, address and a to the organization concerned addressed note giving her permission to speak to Sally Hamilton. Please do not send any original documents, as we cannot accept any liability for this. The Daily Mail takes no legal responsibility for the replies.