Tax scams on the rise

Over the last two weeks, HMRC have issued in excess of four million emails and text messages to taxpayers reminding them to file their 2020/21 SA tax return on or before the 31st January 2022 deadline.

As I know from experience, in a fair percentage of those contacted, a degree of panic sets in. This is because they are now under time pressure and they know that HMRC is likely to be contacting them again between now and the end of January, which makes them far more vulnerable to the scammers.

What are the most common tax scams?

Taxpayers have reported to HMRC nearly 800,000 scams in the last year and I suspect that there have been many more that went unreported. The three most common are:

• False websites: Most of these masquerade as genuine HMRC or YouGov websites and they attempt to trick you into inputting your personal information and in some cases asking for a payment for an alleged Tax/NI debt.
• Phonecalls: These are usually automated and tell people that HMRC has issued a warrant for their arrest for tax they owe, typically in the range of a few hundred to a couple of thousand pound. The scary caller then suggests that they pay the tax they owe by debit card whilst they’re on the phone, to avoid the bailiff turning up. I have had 2 or 3 such calls and believe me, they are intimidating.
• Emails and texts: The scammers message will normally ask the person contacted, to fill out their personal details in order to claim a refund from an earlier tax year. No money is asked for as the scammers’ intention usually to garner personal data to use in other scams.

How to avoid being tax scammed

Whilst the tax office is working hard to combat this type of fraud, for example they have taken down nearly 9,000 malicious websites so far this year, it’s a bit like trying to repair a leaking dam. As soon as one leak is plugged another pops up a short while later. So, what can you do to protect yourself:

1. Were you expecting a tax rebate? If the answer is no, this should put you on high alert, so check in your Government Gateway account or phone your accountant.
2. Did you expect to be contacted? If the answer is no, or if the contact seems odd in any way, double check as in 1) above.
3. Any request for urgent action is suspicious. Any genuine contact by HMRC will merely tell you, for example, to file your return by January 31st. If, however, you are being urged to immediately pay money, or give personal information, don’t!
4. Pay immediately to avoid arrest! The tax office will never threaten you with arrest by either a message or a phonecall.
5. Do not click on non-official websites. All genuine HMRC website addresses start with gov.uk, and if the apparently genuine one you’re looking at does not have this link, it will be fake.
6. Check your Government Gateway account (also known as a personal tax account). If HMRC are genuinely trying to contact you, it is near certain that a message will be in your account.

You can report anything suspicious to HM Revenue and Customs’ phishing team. If it’s a text message, forward it to 60599 and if it’s an email, forward it to [email protected]

What can you do if you’ve fallen for a tax scam?

Fraud in all of its manifestations, is sadly on the increase; this is especially so with older people, many of which only started using their debit cards to pay for goods and services during lockdown. Unfortunately, scamming techniques are becoming more and more sophisticated, and even the most vigilant people can still fall victim to scams.

If a scammer has persuaded you to transfer money to their account or conned you into giving up your bank details so they can make the transfers themselves, this is known as bank transfer fraud or APP (Authorised Push Payment) fraud.

In 2019, the bigger banks all signed up to the voluntary Contingent Reimbursement Model Code (CRM), which means they have to take a series of steps to protect customers and reimburse those who aren’t to blame for the financial loss. Regrettably, this code is not perfect and even when the banks agree to reimburse you, it can take many months.

Tax Scam Redress:  Is anything further being planned?

It is to be regretted, that because the CRM code is voluntary, it does not cover the newer challenger banks and those that have signed up appear reluctant to reimburse customers who have fallen victim to APP fraud.

Which Magazine has repeatedly raised concerns that the voluntary approach isn’t working and has been at the front of the charge to give victims the chance of fairer and more consistent redress and finally change appears to be in the air.

Last month, The Payment Systems Regulator (PSR) announced that the Treasury will make the necessary legislative changes to provide for mandatory reimbursement for scam victims. Interested parties have been given until 14th January for any input into the consultation process. The PSR has also set out various proposals so that it is ‘ready to act as quickly as possible’ when the law is changed, which is expected later in 2022.

Tax Accountant’s view

Whilst I’ve regularly warned people to be vigilant against scam phonecalls, emails and the like, the scammers keep moving the goalposts and are regularly changing their tactics to catch out the unwary. So, my final piece of advice is that if you get any form of communication purporting to be from HMRC, your default position should be to check that it is genuine first, by going on to your Government Gateway account or by phoning your accountant

In compiling this Blog, my thanks go to Which Magazine and an article by Danielle Richardson on 23 Nov 2021. You can read more at: https://www.which.co.uk/news/2021/11/hmrc-issues-tax-scam-warning-to-self-assessment-taxpayers-heres-what-to-watch-out-for/ – Which?