Cowboy’ is a term often used to describe a tradesperson who is poor at their work and potentially untrustworthy. Similar to other trades and professions, a small minority of tax agents are cowboys – lacking the necessary tax knowledge, and incompetent in carrying out their work. Worse still, some tax agents are dishonest in their dealings with their clients and HM Revenue and Customs (HMRC).

Tax Rebate Claims

For example, some firms offer tax rebate services, submitting tax repayment claims to HMRC on their clients’ behalf. Whilst there are tax rebate firms which operate transparently and provide legitimate services, some do not. Unscrupulous agents exploit their clients, such as by submitting tax repayment claims based on false or incorrect information, and charging high fees for tax refunds to which clients are not entitled.

The prospect of receiving an unexpected tax rebate is understandably enticing. Unfortunately, the inadvertent use of cowboy tax rebate agents can leave taxpayers out of pocket, in terms of professional fees for obtaining a tax rebate that subsequently must be paid back to HMRC (plus interest, and possibly penalties).

Out of Thin Air

Recommendations by work colleagues to engage a tax rebate agent do not necessarily constitute safe endorsements. For example, in Lucas v Revenue and Customs [2025] UKFTT 702 (T), the taxpayer (DL) was a driver for couriers (UPS). Several of his colleagues had previously been approached by a company (Apostle), which offered to obtain ‘tax rebates’ relating to the cleaning of uniforms and subsistence expenses. His colleagues successfully received payments of around £3,000 each. DL approached Apostle and asked them to check whether he was due a tax rebate. Subsequently, Apostle sent ‘calculations’ to DL. He approved the tax amount shown as due to him. Apostle did not send tax returns to DL for approval. In November 2020, HMRC received tax returns for DL for 2016/17, 2017/18, 2018/19 and 2019/20, which were submitted digitally by Apostle without DL’s knowledge or signature. The only items in the returns were DL’s salary, a claim for ‘business travel and subsistence expenses’, and a claim for £60 in respect of a ‘fixed deduction for expenses’ relating to an allowance for laundering uniforms. In December 2021, HMRC received a tax return for 2020/21, submitted by Apostle and claiming travel and subsistence expenses. After checking DL’s tax position, HMRC concluded that Apostle had claimed expenses based on, at best, guesstimates. The expenses were, in any event, not allowable (except for the flat-rate uniform allowance). HMRC issued discovery assessments for all five tax years.

The First-tier Tribunal (FTT) concluded that Apostle was acting on DL’s behalf in submitting the tax returns. In addition, the FTT found that Apostle had acted deliberately in submitting tax returns containing excessive and unallowable expense claims. Apostle did not provide any rationale for the amounts claimed; nor did they appear to have any. The FTT found that HMRC made valid discovery assessments to recover the deliberate loss of tax. DL’s appeal was unsuccessful.

Practical Tip

HMRC is clamping down on non-compliant tax agents, with proposed legislation introducing new and enhanced powers to tackle dishonest conduct expected to be introduced from 1 April 2026 (see tinyurl.com/ HMRC-Advisers-Powers). In the meantime, taxpayers seeking tax agents to make legitimate tax repayment claims (instead of them dealing with HMRC directly) should exercise due diligence when doing so.