The Rise of Online Tax Scams

Cybercrime does more than destroy a person’s finances. It also has the potential to harm their self-esteem and mental health. Because of this, it is important to be aware of the types of scams that are circulating around the internet. Recently, tax scams are becoming ubiquitous.

This week, we are discussing what tax scams are, how criminals are sourcing victims, and how you can protect yourself against these bad actors. We will also examine how governments and independent companies are intervening to put an end to cybercrime.   

Tax scams

Her Majesty’s Revenue and Customs (HMRC) in the UK recently brought to light that scammers are obtaining the personal details and logins of Government Gateway customers. Presumably, this has become a more prominent issue in recent months because the Self Assessment deadline for tax returns was 31 January 2022.  

By gathering this information, criminals can submit fraudulent tax refund claims by registering for income tax self-assessment before they receive the repayment. In the last year, 570,000 incidents were reported. Of these, almost 220,000 cases of fake tax rebates were reported to HMRC.

HMRC claims to have:  

  • responded to almost 800,000 referrals of suspicious conduct, many of which claimed to offer tax rebates  
  • worked with telecommunications companies to block over 1,000 phone numbers that have been used to commit HMRC-related scams  
  • received 21% more reports of phone scams from the previous year  
  • reported over 8,500 malicious web pages to be taken down  

These scams are victimising individuals that range from pensioners to teenagers. Fraudsters are targeting them on social media, text messages, calls, or emails. They either offer a refund or demand the victim make a payment for a tax that was supposedly unpaid. By convincing the individual that they are in contact with a genuine HMRC representative, and that they will be able to claim a tax refund without risk, scammers can obtain enough information to temporarily steal their identities.   

Aside from having your identity stolen, there are various problems that may arise once you hand over your personal information to tax scammers. Most importantly, you are at risk of tax fraud. This is true even if you had no intentions of doing anything illegal, you are still at risk of tax fraud. Therefore, you may be expected to pay the full amount of the fraudulent claim.   

These incidents often incentivise criminals to exploit their victims further. For example, when in contact with potential victims, fraudsters may threaten blackmail, violence, and to further utilise their personal information for their own gain. 

If at any point your Government Gateway credentials are requested of you, or details like your bank account, NIN, passport, etc., it is imperative to ensure you are engaging in genuine communication with HMRC. HMRC is now advising that customers should either deal directly with them about their tax refunds, or with their tax adviser.  

The head of cybercrime at HMRC is advising people to avoid situations that seem too good to be true. Anyone who must file British taxes should beware of these tax scams. However, cybercrime is on the rise globally. It is advisable to be diligent in your tax dealings wherever you are in the world.  

For anyone that believes they may be the victim of this kind of criminal activity, they can report it to HMRC by completing their online form.   

Government intervention

The recent uptick in cybercrime is causing great concern to lawmakers and other people around the world. HMRC is currently collaborating with social media companies and other law enforcement agencies to resolve the issue of criminals abusing online platforms. In fact, the British government has made plans to include in an online safety bill measures to protect against internet scams. After a significant amount of campaigning from people across industries, the government finally agreed to cover fraudulent advertisements in the bill.   

Previously, a draft of the law stated that platforms would have a duty to protect their users against malicious users attempting to commit fraud. With the recent change, online platforms will be required to not only protect their users from scams by other users, but it will also ban them from allowing fraudulent adverts to appear on their sites. This includes financial promotions that are unlicensed, adverts for fake companies, and scammers who impersonate real businesses. One example of an impersonation scam occurred recently. A scammer posted fake adverts on Google and Facebook as though he were the founder of Money Saving Expert.  

Facebook and WhatsApp’s parent company, Meta, has already joined this anti-scam initiative. This bill will largely impact companies with a wide reach, like Google, Facebook, Instagram, and Twitter. These platforms will need to implement proper systems, policies, and processes that will allow them to prevent the publishing or hosting of these advertisements. They will also be required to remove such ads from the site once they have become aware of their existence.   

The changes to this law coincide with another programme meant to target influencers who are deceptive to their followers. Now, content creators will need to declare when a post is an advertisement. This means they must disclose when they are being paid to promote a product.  

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Protect yourself – seek advice

While it may be overdue, governments and independent companies are finally acknowledging the severity of tax scams. Firms must be held accountable if they publish paid advertisements. The hope now is that criminals will no longer be able to find loopholes within these companies’ safety systems. There will also be less opportunity to exploit their inadequate policies.   

Private Client Consultancy takes safety, security, and protection very seriously. If you have any questions about financial strategies or how we can help safeguard your assets, contact us today.