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The latest figures on phone and online scams (tinyurl.com/hmrcscamstat) are frightening. For example, over 200,000 examples of bogus tax rebate contacts were reported in 2021 alone.
One of the interesting things in all this is where the line is drawn between scams and sharp practice. I looked through my junk email folder before writing this and found an email linking to a site which invites me to apply for a tax refund on the interest element of payment protection insurance compensation. There is no doubt that for some people tax deducted at source on the interest will exceed their liability for the year, so claims may well be legitimate. But I had to dig deep to find that the fee is 48% of the total refund. Not only that, but buried even further in the small print is a clause which says that by signing up you ‘request that HMRC remove any previous tax agent from your tax file’. This may not be a scam – though who knows what checks are actually made to ensure that claims are legitimate – but it is surely sharp practice.
What protection should there be for consumers here? There is a respectable argument that if people are entitled to tax rebates there is nothing wrong in making it easy for them to obtain them. But should HMRC have a greater responsibility to draw people’s attention to potential reclaims? Probably. But then how does somebody know that a communication from HMRC is genuine? We end up where we started.
I don’t know the answer, but there is a real issue here which needs resolving even if it means, as it inevitably would, restrictions on those who are offering a genuine service to the public.
If you do one thing...
Read paragraph 19 of the First-tier Tribunal decision in Starz Traders Ltd (TC8420). ‘Unexplained’ deposits are not always taxable.
