The Chancellor announced the following measures on raising standards in tax advice in his Spring 2023 Budget.

Rendering void assignments of Income Tax repayments

Following a previous Consultation, it was confirmed at the Spring Budget that Spring Finance Bill 2023 will include measures to ensure that, from 15 March 2023, taxpayers can no longer legally assign their Income Tax repayments to a third party such as an agent.

  • The changes will apply UK-wide and will take effect from 15 March 2023, meaning that any assignments received by HMRC on or after that date will be legally invalid and any repayment will remain the property of the taxpayer. 

Taxpayers will still be able to use an agent to claim repayments on their behalf and have the repayment paid to the agent by using a nomination.

These measures seek to address consumer protection issues in the repayment agent market following concerns being raised that many tax repayment agents require their clients to sign assignments which transfer legal entitlement to their repayment to the agent, who then deducts their fee.

Many taxpayers do not understand the consequences of what they are signing, meaning they are subject to potentially excessive fees and unable to unilaterally rescind the assignment.

What is the difference between a nomination and an assignment?

A taxpayer can nominate someone else to receive a repayment on their behalf by completing the appropriate authorisation on a return, claim form or repayment request form. Nominations can also be made by letter or by telephone.

Where a nomination is made:

  • The taxpayer remains the person legally entitled to the repayment.
  • HMRC will comply with the nomination at their discretion. 
  • The taxpayer may withdraw the nomination should they choose. 

Where, prior to 15 March 2023, a taxpayer legally assigned a repayment to a third party by a deed or letter of assignment, the assignee became the person legally entitled to the repayment. 

  • For assignments made before 15 March 2023, HMRC was obliged to make the repayment to the person to whom it has been assigned and the taxpayer could not unilaterally rescind the assignment.

Useful guides on this topic

Budget 2023: At a glance
Freeview summary of the measures announced in the Budget 2023

External link

Raising standards in tax advice: protecting customers claiming tax repayments: Rendering void assignments of income tax repayments

Draft legislation

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