HMRC issues scam warning to tax credits claimants
Tax credit claimants need to be on their guard against fraudsters, as HMRC warns of increasing use of text messages by scammers
According to the National Cyber Security Centre, HMRC was the third most spoofed government body in 2022, behind the NHS and TV Licensing.
HMRC has issued an alert providing details of a number of new scams that aim to trick people into handing over money or personal information, including claims that a taxpayer’s National Insurance number has been used in a fraud.
In the year to April 2023 HMRC responded to 170,234 referrals of suspicious contact from the public. Of these, 68,437 were related to bogus tax rebates.
HMRC worked with the telecoms industry and Ofcom to remove 212 phone numbers being used to commit HMRC-related phone scams in the last year and responded to 58,186 reports of phone scams in total.
The number of scams has gone up dramatically in the last three years from only 425 phone scams in April 2020.
The scale of the problem was highlighted by the tens of thousands of fake web pages containing malicious information about HMRC and ways to claim tax credits. In a single year, 26,922 malicious web pages were reported to HMRC for takedown.
Criminals use deadlines – like the tax credits renewal deadline on 31 July – to target their victims and the department is warning around 1.5 million tax credits claimants to be alert to scams that mimic government communications to make them appear genuine.
Scam messages can be convincing, and individuals may be pressured into make rushed decisions. HMRC will never ring anyone out of the blue making threats or asking them to transfer money.
Typical scam examples include:
- emails or texts claiming an individual’s details are not up to date and that they risk losing out on payments that are due to them;
- emails or texts claiming that a direct debit payment has not ‘gone through’;
- phone calls threatening arrest if people do not immediately pay fake tax owed;
- claims that the victim’s National Insurance number has been used in fraud; and
- emails or texts offering spurious tax rebates or bogus grants or support.
Myrtle Lloyd, HMRC’s director general for customer services, said: ‘Tax scams come in many forms and we’re urging customers to be alert to the tactics used by fraudsters and never to let yourselves be rushed.
‘If someone contacts you saying they’re from HMRC and asks you to give personal information or urgently transfer money, be on your guard. Search ‘HMRC scams’ advice on gov.uk to find out how to report scams and help us fight these crimes.’
HMRC is also urging tax credits customers to be alert to misleading websites or adverts asking them to pay for government services which are free, often by charging for a connection to HMRC helplines.
HMRC is currently sending out tax credits renewal packs to customers and is reminding anyone who has not received theirs to wait until after 15 June before contacting HMRC.
Taxpayers can renew their tax credits for free via gov.uk or the HMRC app.
HMRC has a video on YouTube explaining how tax credits claimants can use the HMRC app to view, manage and update their details.
By the end of 2024, tax credits will be replaced by Universal Credit. Customers who receive tax credits will receive a letter from the Department for Work and Pensions (DWP) telling them when to claim Universal Credit. It is important that people claim by the deadline shown in the letter to continue receiving financial support as their tax credits will end even if they decide not to claim Universal Credit.
HMRC is also warning people not to share their HMRC login details with anyone else. Someone using these could steal from the account owner or make a fraudulent claim in their name and leave the individuals having to pay back the full value of any fraudulent repayment claim made on their behalf.
HMRC advice
Protect
- criminals are cunning – protect your information.
- take a moment to think before parting with your money or information.
- use strong and different passwords on all your accounts so criminals are less able to target you.
Recognise
- do not trust caller ID on phones. Numbers can be spoofed.
Report
- if you’re unsure about a text claiming to be from HMRC forward it to 60599, or an email to phishing@hmrc.gov.uk. Report a tax scam phone call on gov.uk.
- contact your bank immediately if you’ve had money stolen, and report it to Action Fraud. In Scotland, contact the police on 101.
HMRC aims to reduce use of post and call centres
The government plans to move rapidly to a digital only approach to communications with HMRC to reduce admin costs and cut use of call centres
To achieve this the government intends to reform the rules about how taxpayers give consent to communicate digitally with HMRC by making it the default position.
The changes are in line with HMRC’s longer term strategy to increase the use of self-serve and digital channels and to provide services that are ‘easy to use, with increased support to remove barriers to digital services where appropriate’.
It also admits that HMRC guidance needs to be improved to make it more accessible and understandable for taxpayers.
In future, HMRC will provide less choice around the non-digital channels it offers to taxpayers such as telephone calls and post to reduce the use of these channels, where users are able to go digital.
HMRC’s aim is to improve the range and accessibility of its digital services and move as much taxpayer interaction to self-serve digital channels as possible. At the same time, HMRC will look to increase automation and the ability to self-serve in its non-digital channels wherever possible, while providing support for those who need it.
Many taxpayers already do some of their tax online, using their personal tax account, business tax account and the HMRC app. ‘As these services have been developed separately over the last few years, they have not always offered a unified and consistent experience to taxpayers,’ HMRC said.
As part of the overhaul, HMRC aims to introduce a new single customer account for all taxpayers.
HMRC aims to implement its first phase of transforming digital services through the single customer account by 2025. This will focus on transforming services for individual taxpayers and account functionality, with business needs addressed in later phases.
Part of the plan will focus on improving sign in, security and subscription to digital services. HMRC will also start rolling out features to enable taxpayers to change their details (phone numbers, emails, address, marital status) online in a single place and have those changes apply to all services to which they are subscribed.
The proposals also aim to reduce the volume of post sent out by HMRC, which currently sends around 70 million items by post annually, at a cost to the taxpayer of around £40m.
Over the next two years, HMRC will start to reduce the higher volume letters and forms it sends out on paper and will instead provide these through digital channels. It will also do this for some key inbound forms.
It has already confirmed that it will require the minority of digitally capable employers who still submit P11D and P11D(b) forms (reporting employee benefits and expenses) on paper to use online forms from April 2023. It will then move to providing digitally capable employers with P6 and P9 coding notices solely using digital methods.
HMRC is seeking views on whether all, but digitally excluded taxpayers should be required to register for income tax for self assessment (ITSA) online, through their digital tax account.
Using the digital by default approach, HMRC would assume consent from the taxpayer to receive future ITSA communications digitally, unless they opted out. HMRC would then deliver the taxpayer’s first notice to file digitally and require the first and subsequent annual ITSA returns to be delivered digitally.
Before implementing these changes HMRC said it would ensure there was a high level of taxpayer satisfaction with the digital registration service. It also said there would be sufficient advance notification of the move with advance communications with agents, accountants and taxpayers.
There are also plans to reform the repayment process with a push to digital only approach.
Recent research found that participants were keen to see fewer steps in the repayments process and some found the sign up and authentication process to be a barrier and were keen to see a simplified approach.
There was also low awareness of the process for claiming repayments digitally and taxpayers said that P800 notifications could often be missed or not acted upon.
On PAYE overpayments, HMRC plans to contact taxpayers to offer a choice between receiving a digital payment or requesting a payable order instead of sending a payable order after 21 days if the taxpayer takes no action.
This will help to prevent payable orders being sent to incorrect addresses and will allow taxpayers to self-serve and get their repayments more quickly, which will also reduce HMRC’s printing and paper costs.
HMRC is also looking at ways to improve the accuracy of tax codes and wants to better understand how it can try to get tax codes more reflective of an individual’s circumstances more quickly when circumstances change through job moves and additional of employee benefits such as company cars.
- Published in HMRC
Employees need to check their tax codes for errors
The majority of employers report errors with employee tax codes, while there can be long delays in resolving allocation of the wrong tax code at HMRC
As people start to receive notification of their tax codes for 2023/24, survey of mid-market businesses by BDO showed that 99% of employers have experienced issues with their employees’ tax codes.
More than half of employers (51%) said their staff did not understand what their tax codes mean.
The survey also found that almost the same proportion of respondents (49%) said that employees had complained about coding errors which in some cases had led to them receiving catch-up bills for unpaid tax in later years.
Almost a third (31%) pointed to problems relating to delays in the time it took to rectify incorrect tax codes with HMRC.
Each code is made up of a combination of numbers and letters, the numbers relating to the tax-free income to which the employee is entitled while the letters refer to a taxpayer’s personal situation and how it affects their personal allowance.
HMRC does provide some explanations for taxpayers but the system is complex.
Paul Falvey, tax partner at BDO said: ‘HMRC has to implement complex tax laws. The tax code system is a clever way to do that but it isn’t infallible. All it can do is impose its best estimate of tax deductions for the year. This leaves some people ending up underpaying tax and having to pay a catch-up bill: obviously, this can breed distrust in the system.
‘Tax codes aren’t simple to understand, and there is undoubtedly more that HMRC could do to help people understand why they have been assigned a particular code.’
Tax codes are complex and there are 20 letter combinations listed on the gov.uk website, with further codes (W1, M1 or X at the end) denoting emergency tax.
There is also a K code which denotes that tax due to be collected is worth more than the tax-free allowance. This can often happen when an employee has to pay tax owed from a previous year.
A common complaint cited by 38% of respondents was the erroneous or excessive use of emergency tax codes. These are applied if HMRC does not get an employee’s income details in time after a change in circumstances, such as a new job, or starting work for an employer after a period of self-employment. While these codes are temporary, they can cause cashflow problems for employees, and particularly for workers on lower incomes.
Falvey added: ‘There are things that taxpayers can do to make sure the right amount of tax is collected. We would always advise taxpayers to check their tax codes, by logging into their personal tax account. This is where you can check the estimates of how much income you’re expected to get from your jobs and pensions.
‘You can also inform HMRC about any changes that are likely to affect your tax code during the tax year. Helping HMRC to get it right means you shouldn’t have any nasty surprises later. For example, if you claim child benefit but you or your partner’s income goes over £50,000, telling HMRC straight away means that the high income child benefit charge can be collected through your tax code to avoid building up tax debts – although you will still have to report this on your tax return.
‘Common issues are around the emergency tax being applied when someone starts a new job or takes on an additional part-time job. Problems can also arise with the wrong income tax being taken from pension payments.
‘While it’s unlikely we’ll see any meaningful reform of tax codes in the near future, HMRC could probably do a better job of rectifying errors quickly so that people aren’t left out of pocket.’
- Published in HMRC, Uncategorized
HMRC flags £1.26k marriage allowance for Valentine’s Day
HMRC has issued a reminder to millions of married couples to make sure they are claiming the £1,260 marriage allowance tax break
While more than 2.1 million couples claim marriage allowance, HMRC estimates that up to 2.4m couples are missing out because they do not realise they may be eligible, particularly couples where one partner has retired, has given up work to take on caring responsibilities, or is unable to work due to a long-term health condition.
All claims should be made on HMRC and do not use a third party provider as they will take a large cut of the allowance through commission fees.
Marriage allowance is worth up to £252 a year, equivalent to around 10% of an individual’s tax-free personal allowance. The maximum amount that can be transferred to their husband, wife or civil partner is dependent on the personal allowance for that tax year.
It is worth noting that claims can be backdated to April 2018.
Taxpayers earning less than £12,570 a year can transfer up to £1,260 of their personal allowance to their higher earning partner, to reduce the amount of tax they pay. They can backdate their claim to include any tax year up to 6 April 2018, which could be worth up to £1,242 in tax relief.
Trusha Shah, tax manager at HW Fisher said: ‘It might not be the most romantic reason to propose, but there are tax benefits to consider if you are getting married. Eligible married couples, or those in a civil partnership can reduce their tax by up to £252 via the marriage allowance.’
Couples can use the marriage allowance calculator on gov.uk to check if they are eligible for the tax break.
Angela MacDonald, HMRC’s deputy chief executive, said: ‘We want every eligible couple to benefit from marriage allowance tax relief. Couples whose circumstances have changed – perhaps one of them has stopped working or taken a lower paid job – may not realise they are entitled to claim.
‘It’s easy to find out what you may be due – search ‘marriage allowance calculator’ on gov.uk to get started. By applying on gov.uk, rather than through a third party, you get to keep 100% of the tax relief due.’
Couples could claim marriage allowance if the following criteria applies:
- married or in a civil partnership;
- do not pay income tax, or their income is below the personal allowance of £12,570;
- their partner pays income tax at the basic rate – which typically means their income is between £12,571 and £50,270.
Tax year | Marriage allowance |
2022/23 | £252 |
2021/22 | £252 |
2020/21 | £250 |
2019/20 | £250 |
2018/19 | £238 |
Married allowance can be cancelled on gov.uk if a couple’s circumstances change.
- Published in HMRC
HMRC raises late payment interest from 21 February
HMRC will raise interest rates on tax debt to 6.5% from 21 February following latest increase in base rate
The late payment and repayment interest rates applied to the main taxes and duties that HMRC currently charges and pays interest on will rise to:
- late payment interest rate — 6.5% from 21 February 2023
- repayment interest rate — 3% from 21 February 2023
This means that the late payment interest rate will increase by 0.5% to 6.5% from 21 February. The rate last increased to 6% on on 6 January. This is the highest rate since the start of the financial crisis in November 2008.
Late payment interest is payable on late tax bills covering income tax, National Insurance contributions, capital gain tax, stamp duty land tax, stamp duty and stamp duty reserve tax. The corporation tax pay and file rate also increases to 6%.
Repayment interest will also be increased from the current 2.5% rate to 3%.
Corporation tax self assessment interest rates relating to interest charged on underpaid quarterly instalment payments rises to 5%.
The interest paid on overpaid quarterly instalment payments and on early payments of corporation tax not due by instalments rises to 3.75%.
- Published in HMRC, Interest Rates
Former chancellor owes HMRC £3.7m in unpaid tax
Nadhim Zahawi has agreed to pay millions of pounds in tax to HMRC following a dispute over his family’s financial affairs
The former chancellor has agreed to pay a seven-figure sum to the tax authority to settle a tax dispute totalling £3.7m related to his family trust, Balshore Investments.
In July, HMRC examined the tax affairs of MP Nadhim Zahawi after an inquiry was launched by the National Crime Agency (NCA) in 2020.
The Serious Fraud Office (SFO) had also investigated Zahawi’s finances, according to a report in the Independent.
The investigation probed Zahawi’s involvement in a scheme to avoid tax by using an offshore company to hold shares in YouGov – the polling company he co-founded.
His family trust, Gibraltar-registered Balshore Investments, held a stake worth more than £20m, but sold up in 2018, with the proceeds being transferred to an unknown recipient.
Tax Policy Associates, a think tank, has estimated that Balshore’s sale of YouGov shares should have incurred capital gains tax (CGT) of about £3.7m.
Zahawi has insisted that he ‘does not have, and never has had’ an interest in Balshore Investments and that he was ‘not a beneficiary’.
A spokesperson for Zahawi said: ‘As he has previously stated, Mr Zahawi’s taxes are properly declared and paid in the UK. He is proud to have built a British business that has become successful around the world.’
Contesting the news, Zahawi stated: ‘There have been news stories over the last few days which are inaccurate, unfair and are clearly smears. It’s very sad that such smears should be circulated and sadder still that they have been published.
‘These smears have falsely claimed that the Serious Fraud Office (SFO), the National Crime Agency (NCA), and HMRC are looking into me. Let me be absolutely clear. I am not aware of this. I have not been told that this is the case.
‘I’ve always declared my financial interests and paid my taxes in the UK. If there are questions, of course, I will answer any questions HMRC has of me.’
Labour chair Anneliese Dodds has said there were ‘serious questions’ for Zahawi to answer, saying: ‘Why did Nadhim Zahawi claim last summer that he had paid his taxes in full, and that he wasn’t aware of an investigation? When was he made aware of an investigation? Was the prime minister aware of an investigation when he appointed Nadhim Zahawi to the cabinet?’
- Published in HMRC, Tax Investigation
HMRC hands out £8m in fines for tax evaders
A recruiter, a pension administrator and a payroll services provider all avoided tax bills totalling £13.8m and face millions of pounds in fines from HMRC
During the month of November, HMRC identified £13.8m in unpaid tax by the businesses and individuals named in the quarterly deliberate defaulters’ list, £3.2m less than the £17m that was identified in the last quarter.
HMRC’s list names over 100 individuals and businesses who have failed to pay their taxes and been identified in the last three months.
In November, the level of penalties handed out amounted to £8m in total for outstanding tax evasion, as HMRC hammered down on deliberate tax defaulters.
At the top of the list of deliberate tax defaulters was a real estate agent who failed to pay a tax bill of £2,695,693 over a four-year period between April 2014 and 2018. Simon Karimzadeh, sole director of Euroland 3, now faces a penalty of £1,227,997 related to income from capital gains.
According to Companies House, Karimzadeh is listed as the director of Euroland 3 Limited, Euroland 2 Limited, and Euroland 1 Limited, which are all still active and trading. The companies buy and sell real estate.
Second place goes to a former technology consultant who failed to pay £993,729.79 in tax payments between April 2010 and 2019. Stephen Bernard Wheatley, former director of Westward Technology Limited and Qorbis Holdings Limited, received penalties amounting to £457,555.08.
In the meantime, a pension administrator failed to pay £729,596 worth of tax between April 2018 and 2020. Based in London, Avril Patricks Stewart Limited entered into compulsory liquidation in February 2011, and was fined £491,831.44 for unpaid tax by HMRC.
A recruitment and payroll service provider has been fined £533,270.96 for tax evasion over a two-year period. Arrow Logistics Ltd, based in London, failed to pay £627,377.61 in tax between April 2020 and 2022.
Bolton-based payroll services provider Ditto Payroll Ltd takes the fourth spot after not paying £542,238 worth of tax between April 2020 and 2022. HMRC handed the business a £515,126.31 fine and the group entered into a creditors voluntary liquidation in April 2021.
In addition, an international telecoms company called Akal Nation Limited based in London avoided paying £381,038 worth of tax between February and July 2019. HMRC handed the business a £220,049.44 fine.
Finally, a printing company based in Bradford avoided £359,358 in tax payments. A&S Printers was fined £211,122.66 by HMRC for tax evasion over a 10-year period, between May 2010 and July 2020.
- Published in HMRC
HMRC raises late payment interest from 22 November
HMRC will raise interest rates on tax debt from 22 November following the 0.75% increase in the Bank of England base rate
The current late payment and repayment interest rates applied to the main taxes and duties that HMRC currently charges and pays interest on are:
- late payment interest rate — 5.5% from 22 November 2022
- repayment interest rate — 2.0% from 22 November 2022
This means that the late payment interest rate will increase by 0.75% to 5.5% from 22 November 2022. The rate last increased to 4.75% on 11 October. This is the highest rate since the height of the financial crisis in January 2009.
Late payment interest is payable on late tax bills covering income tax, National Insurance contributions, capital gain tax, stamp duty land tax, stamp duty and stamp duty reserve tax. The corporation tax pay and file rate also increases to 5.5%.
The repayment interest rate will also be increased from the current 1.25% repayment interest rate to 2.0%.
Corporation tax self assessment interest rates relating to interest charged on underpaid quarterly instalment payments rises to 5.5%, up from 4.75%.
The interest paid on overpaid quarterly instalment payments and on early payments of corporation tax not due by instalments rises to 2% from 1.25%.
- Published in HMRC
HMRC formally opens Manchester hub
The latest regional HMRC hub has opened in Manchester and will accommodate 3,000 staff in a purpose built facility
The Manchester Regional Centre and UK government hub is located at Three New Bailey and was formally opened by HMRC chief executive Jim Harra on 12 October 2022.
The office’s distinctive red-brick weave references the area’s industrial heritage buildings and contains meeting rooms named after computer pioneer Alan Turing and Factory Records founder Tony Wilson, and landmarks including The Bridgewater Hall.
Harra unveiled a plaque, which is the first mounted in a HMRC building to bear the government department’s changed name, His Majesty’s Revenue and Customs, following the accession of King Charles III to the throne.
Jim Harra, HMRC’s chief executive, said: ‘Three New Bailey is a landmark building and will enable HMRC staff to work together in an inspiring modern environment which prioritises inclusive design.
‘I am delighted to formally declare our Manchester Regional Centre open.’
The seven-storey building will house around 3,000 HMRC staff, including those whose work focuses on customer compliance and borders and trade. It is also home to a team from the Valuation Office Agency.
Three New Bailey has been built using HMRC’s inclusive design guide, with features including step-free access to all levels and workspace finishes which balance colours and reduce glare for neurodiverse and visually impaired staff.
The opening ceremony was attended by Sir Dermot Turing, the nephew of Alan Turing.
Moving to regional centres will save around £300m cumulatively up to financial year 2025 to 2026 and will deliver annual cash savings of £74m in financial year 2025 to 2026.
HMRC’s other regional centre locations are Belfast, Birmingham, Bristol, Cardiff, Croydon, Edinburgh, Glasgow, Leeds, Liverpool, Manchester, Newcastle, Nottingham, Portsmouth and Stratford in east London.
- Published in HMRC
HMRC piles pressure on taxpayers behind on payments
A further increase on interest paid to HMRC for late payment of taxes will hit taxpayers who are not up-to-date, warns Blick Rothenberg
Nimesh Shah, CEO at the firm said: ‘Following another Bank of England base rate to 1.75%, HMRC has confirmed that it will raise its interest rates on late tax bills to 4.25% on 23 August – a level not seen since January 2009.’
He added: ‘Since the start of 2022, the HMRC’s interest rate has increased by 1.5% – that’s the equivalent of an extra £225 per annum on a £15,000 tax liability. On the same £15,000 tax liability, you would suffer almost £650 of interest per annum.
‘With continuing rising costs rising across the board, HMRC have hiked up interest on late tax payments at the latest opportunity. It sets a worrying trend for some taxpayers who are struggling to pay their outstanding taxes, against the backdrop of other rising costs.
The threat of further interest rate rises this autumn, coupled with rising inflation, will likely see further increases in HMRC rates.
Shah said: ‘The worst is yet to come on this front, with some economists projecting the Bank of England could decide to increase the base rate to 2.5% by the end of 2022 – this could see HMRC increasing their interest rate on late paid tax to 5% by the end of the year.
‘Taxpayers who have outstanding tax liabilities should be mindful to settle as much as they can afford before there are further rate rises.
‘HMRC have also finally increased the repayment supplement rate by 0.25% to 0.75% – the first increase in this rate in over a decade. It’s quite shocking that HMRC have quickly increased the rate on late paid tax by six times the amount the equivalent repayment interest rate has gone up by this year.
‘HMRC’s meagre 0.75% repayment supplement rate means there is not any great incentive for HMRC to release repayments. There continues to be one rule for money owed to HMRC and another for taxpayers who are due a refund. Many taxpayers have seen significant delays to repayments over the last 12 months, but HMRC can continue to drag their heels with little cost to the Treasury.’
- Published in HMRC, Interest Rates, Tax return
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