HMRC have shared some information with us about letters they send to verify Income Tax Self-Assessment repayment claims. We have had some discussions with HMRC recently as we have received a number of queries and concerns from our members about these letters.
When a taxpayer submits a SA tax return resulting in a repayment of tax being owed to them, HMRC undertake routine checks to ensure the claim is genuine and to identify potential compliance risk. Where their risk indicators suggest that the person or claim may not be legitimate, they will contact them to confirm their identity. This will include the requirement for the person to provide documentary evidence to prove who they are, and to answer some basic questions with regards to the repayment request they have submitted. If the person does not reply to the letter HMRC will remove them from Self-Assessment and not make the repayment.
HMRC recognise that a small number of genuine claimants may receive the letters. There is no obligation to respond to the letter, but if the taxpayer (or their agent) do not respond as requested the repayment will not be made. If the person is uncertain about any aspect of the correspondence, is concerned about the authenticity of the letter, or needs additional support, they should contact HMRC on the official Self-Assessment helpline number provided - 0300 200 3310.
The verification letters are referred to as ‘SURF’ letters. Where a risk of fraud is identified, HMRC will first issue a one page ‘SURF1’ letter to the taxpayer, advising that they believe their unique tax reference (UTR) may have been used to submit a potentially fraudulent repayment claim. If the person has submitted the repayment claim, HMRC ask them to call within 30 days (on the official Self-Assessment helpline number provided). If HMRC do not hear from the person, they will cancel the repayment claim and close down the Self- Assessment record and UTR in due course. This prevents the record from being used again for further repayment claims, for COVID Scheme abuse, and in other fraudulent activity across HMRC and DWP.
If a genuine taxpayer receives the ‘SURF1’ letter and contacts HMRC, at that point HMRC issue the ‘SURF2’ letter asking them to provide evidence of their identity in accordance with a list of documents provided and to complete a Repayment Questionnaire and a form to claim the refund (Form R38). Where HMRC have previously confirmed a taxpayer’s identity, in some instances they will proceed straight to issue a ‘SURF2’ letter to reduce delays in receiving repayments.
HMRC state at the top of the ‘SURF2’ letter that this is not a formal enquiry under section 9a Taxes Management Act 1970. That is because these checks are carried out under section 9 Commissioners of Revenue and Customs Act 2005 (ancillary powers).
Sending the information to HMRC
The letter asks for the verification information to be sent by post. However, the post is considered by many people not to be a secure method of delivery. HMRC have told us that they are exploring the feasibility of using alternative more secure methods of sending them the verification documents requested. However, until such methods are available taxpayers or their agents with concerns regarding the security of their mail should send good quality copies using the most secure method of postage they feel is appropriate; that way HMRC will not need to return any documentation to them and the copies sent to them will be safely destroyed after 50 days.
The querying of agents’ fees
The Repayment Questionnaire is designed to understand the underlying activity and behaviour resulting in the fraudulent repayment request. It is not aimed at genuine taxpayers or agents or used to gather or keep information on genuine, compliant agents. HMRC are reviewing feedback received regarding the Repayment Questionnaire and are working on this to ensure the information requested from taxpayers is clear and relevant.