HMRC issues urgent Self Assessment fraud warning – ‘never let yourself be rushed’

HMRC provide advice on self-employed tax returns

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HMRC has urged its customers to remain vigilant as the department contacts Self Assessment taxpayers. This is especially important to note as fraudsters have been known to use Self Assessments to try and steal money or personal information from people, with 800,000 tax-related scams being reported in the last year alone.

Self Assessment deadlines

The next Self Assessment deadline falls on January 31, 2022 and customers may expect to hear from HMRC around this time of year. This week, more than four million emails and SMS will be issued to Self Assessment customers pointing them to guidance and support, prompting them to think about how they intend to pay their tax bill, and to seek support if they are unable to pay in full by January 31.

This will predominantly hit self-employed workers who cover their tax bills through Self Assessment.

However, HMRC is warning customers to not be taken in by malicious emails, phone calls or texts, thinking these are genuine HMRC communications referring to their Self Assessment tax return.

Myrtle Lloyd, HMRC’s Director General for Customer Services, commented: “Never let yourself be rushed. If someone contacts you saying they’re from HMRC, wanting you to urgently transfer money or give personal information, be on your guard.

“HMRC will also never ring up threatening arrest.

“Only criminals do that. Scams come in many forms. Some threaten immediate arrest for tax evasion, others offer a tax rebate. Contacts like these should set alarm bells ringing, so if you are in any doubt whether the email, phone call or text is genuine, you can check the ‘HMRC scams’ advice on GOV.UK and find out how to report them to us.”

HMRC noted criminals use emails, phone calls and text messages to try and dupe individuals, and often mimic Government messages to make them appear authentic. They want to trick their victims into handing over money or personal or financial information.

Taxpayers can report suspicious phone calls using a form on GOV.UK; customers can also forward suspicious emails claiming to be from HMRC to [email protected] and texts to 60599.

Fortunately, HMRC has a dedicated team working on cyber and phone crimes. They use innovative technologies to prevent misleading and malicious communications from ever reaching the customer. Since 2017 these technical controls have prevented 500 million emails from reaching HMRC’s customers. More recently, new controls have prevented 90 percent of the most convincing SMS messages from reaching the public and controls have been applied to prevent spoofing of most HMRC helpline numbers.

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HMRC fraud

HMRC has been somewhat swamped by fraudulent activity in recent months. According to new research from BLM, between April 1 and June 30 the number of SEISS investigations rose 27 percent, Eat Out to Help Out investigations rose 36 percent and furlough investigations rose 3.6 percent.

A freedom of information act submitted to HMRC assessed the number of compliance interventions launched by the body, in an attempt to protect or recover funds lost via fraudulent misuse of COVID-19 support schemes. It showed SEISS investigations in particular have risen rapidly since April 1 this year by 27 percent, with 1,367 new interventions launched, bringing the total to 6,351. Interventions into potential furlough misuse are now at 7,632 since the pandemic began, with 584 launched into Eat Out to Help Out access.

In September, HMRC also confirmed £1.3billion has been repaid under the furlough scheme since July 2020, with £300million paid back over the past three months alone, as the number of people on furlough declined to its lowest level since the start of the pandemic.

HMRC also confirmed it has redeployed 360 caseworkers to investigate COVID-19 support scheme compliance cases since August 2020, at an estimated cost to the HMRC of £16million. The body confirmed the Taxpayer Protection Taskforce, the Government’s commitment of £100million to hire 1,265 HMRC staff to investigate coronavirus fraudsters, will be in place for 2021/22 through to 2022/23.

Furlough scheme

The furlough scheme has come under particular scrutiny. Price Bailey recently submitted its own Freedom of Information request to the Government and the results showed HMRC is investigating nearly 33,000 reports of fraud relating to the Coronavirus Job Retention Scheme (CJRS).

The same data showed HMRC received a higher proportion of furlough fraud reports relative to the number of furloughed jobs in the most recent quarter. There were 3,208 reports of furlough fraud in Q3 2021, despite just 1.3 million jobs being on furlough (as of September 1, 2021).

Price Bailey highlighted that with the CJRS having ended on September 30, 2021, and with the window which allowed taxpayers to correct claims having closed on October 28, HMRC is now able to move resources away from processing new claims to challenging historic claims. HMRC has stated it intends to collect over £1billion in wrongly claimed furlough money over the next two years via fraud that has been reported and via compliance checks.

Stuart Curtis, a Partner at Price Bailey, commented: “HMRC is looking at over 30,000 high risk cases and will be using intelligence gathered through its fraud reporting hotline to challenge furlough claims.

“We are aware of HMRC accessing multiple sources of data, including checks on employers’ credit and debit card revenue during periods when furlough was claimed. They are also cross checking CJRS related information disclosed on company tax returns against CJRS claims that have been previously submitted and investigating any anomalies between the two.

“An area in which a lot of employers could be caught out is what constitutes work. This is potentially more a case of misunderstanding the guidance at the time, than outright fraud. We have corrected claims where clients assumed that they could engage in, for example, new business activity. We believe that HMRC might challenge that as it is a form of work-related sales activity.

“Small businesses often face the problem of properly separating job functions due to limited staffing. This potentially makes them more vulnerable to having furlough claims challenged if furloughed staff have been asked to perform even the most minimal work-related tasks not associated with their core roles.

“HMRC will likely challenge employers’ interpretation of the guidance. We had one client where HMRC challenged how the guidance had been interpreted but we successfully argued our case and the matter was closed. Many employers could struggle to clearly articulate how they calculated furlough claims if HMRC argues that the guidance has been misapplied.”

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