TAX SCAMS AND FRAUD

The increasing use of electronic communications appears to have led in an exponential rise in attempted fraud, with fraudsters using the tax authorities as a smokescreen for their malignant activities.

Here at PJD Tax we deal with UK and US taxation and have seen scams using the names of the tax authorities on both sides of the Atlantic Ocean. While these attempts may look quite professional a cursory knowledge of how each tax authority behaves should allow you to consign these attempts to where they belong, your deleted items folder. Even if you are then not sure some simple due diligence will assist you in dealing with these matters.

HM Revenue and Customs (HMRC)

I have received any number of E-mails from HMRC alerting me that there is a refund waiting for me, I understand that this good news is also sent out in text messages. This is easy, unless you have previously provided HMRC with explicit instructions to contact you electronically they will not communicate this kind of information in an E-mail or text, just delete straight away. These can look quite convincing but HMRC NEVER send out these types of communications. It is likely that they are asking for your bank details to allow electronic transfer of the so called refund but you can guess their true objective.

I would add that in the event that you do have a refund, deleting the dodgy e-mail will not affect it and you should contact them directly to facilitate repayment and ditch the e-mail; don’t take a risk.If you have authorised your UK tax preparer to correspond with HMRC on your behalf then they will be able to check your online account very quickly and confirm if the refund is real. Obtaining authorisation is a quick and easy process, in most cases, just ask your UK preparer to set this up.

Internal Revenue Service (IRS)

These are rare for individuals living in the UK but I have had experience of a long play that looked every inch a fraud. People meet over the internet, one is based in the US. A relationship ensues, remote only, they never get to meet. Out of the blue the US based party lets the other know that they will be receiving an inheritance from a long lost relative. Great news! What is not so good is that they will not release the assets until some tax withholding has been paid. The “would be” recipient has not got that amount of spare cash and asks that you assist, they are happy to repay you and share some of the money with you when received. Could be a small amount first and you send some money across and get a nice receipt from the IRS, a larger amount is then due!

If you have got this far bad luck, run away now. There are a couple of points that this indicates that this is a scam

  • The IRS do not issue receipts
  • Withholding is taken (withheld) from monies at source
  • There is generally no withholding between US persons
  • Estate tax liabilities are paid by the estate and not the recipient.

In the case I saw they had a receipt from the IRS with a poor copy of the IRS logo (it was stretched), they referred to banks that did not exist and also to a court that I could not find anywhere (using the internet). That the fraudster was prepared to play the long game was impressive (they built the relationship over 12 months) but their use of fictitious financial institutions and courts made it easy to debug!

The bottom line is, do some checking around and see if the actual transactions make any sense.

Paul Devonshire

Please contact us directly if you require helpful tax advice or assistance with your UK or US tax returns.

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published. Required fields are marked *