A sceptic might think that HMRC’s decision to no longer issue PAYE refunds automatically, is nothing more than a cynical plan to keep taxpayers’ legitimate refunds, with presumably the justification that this will only happen if the taxpayer is too stupid or lazy to know that they are owed money.
Is this a deliberate policy to target the middle-aged and older taxpayers? This group tend to naively trust the tax office, which holds all the relevant information, and assume that HMRC must have got it right. They are numbered in the millions but should not despair, as their younger colleagues have come up with a solution, check with TikTok, who do get their tax advice right sometimes.
A bit of background
Under pressure from the accountancy bodies, HMRC have now fessed up and confirmed that with effect from 31st May 2024, it no longer automatically issues repayment cheques when an individual has overpaid tax through PAYE. From that date, if a taxpayer believes that they have overpaid tax, they will need to log onto their personal tax account (PTA) to apply online for their repayment.
Unfortunately, anyone born before the late 1980’s will have received little or no education on personal finances in the UK, However Millennials and Zoomers, who are far more tech savvy, are turning to TikTok for tax advice, an alarming trend you might think, but in this instance, with, surprisingly positive results.
Tax tips from TikTok
It is generally wise to apply a sceptical mind to unsolicited tax and other personal finance advice popping up on social media sites such as Facebook and TikTok. Nestled between weird photoshopped pics, beauty tutorials and viral dance challenges is a somewhat worrying subset of influencers promoting dodgy tax avoidance schemes, or even persuading viewers that they don’t really have to pay tax at all in the UK.
In the largely unregulated Wild West of social media, complex and risky tax schemes that seem too good to be true usually are, even when they claim to be backed by a barrister or a ‘’tax-expert’’. However, although this type of content should normally be avoided like the plague, some videos are by qualified accountants attempting to gain new clients by promoting sound advice and, as long as they’re viewed with caution, they can provide sensible and accurate advice.
One such recent TikTok video has seen hordes of users successfully claim PAYE refunds that they may otherwise not have claimed for some time, or not at all. In fact, my own nephew, told me that he’d kept seeing videos on TikTok where people were claiming up to £2k of PAYE refunds. So, he thought he would log into his PTA to check the PAYE summary and found that he was owed £450 that he had no idea about.
Low Incomes Tax Reform Group (LITRG) comment
Meredith McCammond from the LITRG commented: “Generally we have concerns about tax refund companies targeting people via social media, however, some of the TikTok videos we have seen might actually be helpful to taxpayers. This is because they are raising awareness of the P800 process and the ability for people to claim their refunds via the PTA or the HMRC app.’’
He continued:” Many taxpayers are not getting their money, even those that know they need to take action, but are not digitally savvy so need to claim their refund by phone, which presents further barriers. If these refunds do not go out within four years they cannot be claimed and HMRC keeps the money.”
The news it not all positive
If the taxpayer has been on an emergency tax code, with HMRC having taken too much tax from their payslip each month, news of a refund can feel like a bonus. However, if you factor in the investment opportunity cost, or worse, essential items foregone when take-home pay is reduced during a cost-of-living crisis. Being overtaxed, sometimes for many months, is akin to giving HMRC an interest-free loan.
There is also concern that the change to the repayment process will make some taxpayers more vulnerable to exploitation, with the potential for a new market opening up for repayment agents, who will take part of the repayment as their fee, with the added possibility of fraud by unscrupulous agents.
HMRC face criticism
HMRC took their decision on refunds without seeking input from any stakeholders as to how this would affect taxpayers. Accountants, as well as the LITRG, would have welcomed the chance to ask questions and to offer our input, before HMRC implemented this change. We could potentially have helped with the instructions included on the P800, assisted HMRC with their messaging and in raising awareness among taxpayers.
HMRC responded to the criticism and said: “We’re letting customers know if they overpaid tax last year and are eligible for a refund – and the quickest way to claim is online or via our highly rated app. For customers who do self-assessment, filing your tax return early not only avoids any last-minute stress and helps you plan ahead but it can mean getting any refund for overpaid tax sooner too.”
Accountant’s view
This change of policy on refunds by HMRC is typical of the tax office’s obsession with trying to force all taxpayers to move online or to use their so-called ‘highly rated app’; but you would be hard pushed to find anyone outside of the tax office who highly rates it. When will HMRC accept that the majority of people over 40 are not tech savvy, with many in this group not owning a computer or a smartphone. Unfortunately, whilst TikTok’s advice and tutorial videos have been helpful to many taxpayers, it will not have reached all of this group in society.
