The Taxman Cometh

Habits and routines shape our lives, often in positive ways. As spring arrives, so does the familiar nudge from my other half, reminding me, "That lawn isn't going to cut itself!"

It’s when things happen unexpectedly that alarm bells ring and we should pay more attention. I recently found myself in something of an uncomfortable situation when my neighbour, James, told me about a subject close to my own heart. James’s husband Max earns shed loads of money in banking. I’m not sure exactly what he does, however, two weeks out of four are spent abroad. His expertise with figures at work is certainly not matched by his abilities at home as James deals with everything as well as running his own part time business as a Life Coach. He runs the home like a military machine, the kids are well fed, clean and polite and all the bills are paid on the dot. 

Given the time of year, James had recently completed Max’s Self-Assessment Tax Return on his behalf and had calculated that he was due a rebate of about £650. As a result, he was unfazed when at lunchtime, he received a call, from HMRC. It went something like this,

HMRC ‘Hello Mr Adams, my name is Iris Smith from HMRC and I’m ringing about your husband’s tax rebate, have you got a minute?’

James ‘Yes of course, how can I help?’

HMRC ‘Everything appears to be in order, and I’m just trying to find out if you want your husband’s tax code for next year adjusted to reflect the rebate - or would you prefer the money transferred directly into your joint account? (laughs) I think I know the answer, but I’m required to ask the question.

James (laughs) Surely everyone asks for the cash, don’t they?

HMRC ‘Yes of course - and so would I’

James ‘OK tell me what I have to do’.

HMRC ‘Well I was going to grab your bank details; however, my computer has just crashed, I can’t believe this - we have such a backlog. I’m really sorry, but can I ring you back when this thing decides to start working again?’

James ‘Yes of course’

HMRC ‘Great - I can’t promise anything but I will do my best’.

James then went about his normal daily routine and thought nothing more about it until the phone rang again just before 8pm.

HMRC ‘Hi Mr Adams, it’s Iris from HMRC again. I’m sorry it's so late but I’ve only just got back online. If it’s too late I can call back tomorrow’.

James ‘No it’s not a problem. Where were we?’

HMRC ‘Right, you were just about to give me your bank details so I can credit your joint account with the full rebate amount’.

James ‘Yes that’s fine. Let me just grab my card.

James then went on to provide the caller with all his details - including the 3-digit security code on the back of the card. Iris at HMRC thanked him for his time and assured him the money would be in their account by the next morning. By the time he went to bed, James had already mentally spent most of the rebate money on a deposit for a holiday and an exercise bike.

Max rang the following morning to let him know he was trying to sort out a couple of issues at work and would be staying in Singapore for another two days. James mentioned the call from HMRC and had moved on to something else when Max said ‘Whoa! Stop. Say that again. You gave someone your bank details over the phone?  including the security code?’

It was only at that point did James realise how incredibly naïve he had been. 

James, ‘They must have been from HMRC, how else would they know we are waiting for a rebate?’

Max, ‘We are one of hundreds of thousands waiting for a rebate at this time of year, it’s a numbers game. They ring numbers until they hit on someone in our position’.

James ‘Damn, I’ve been so stupid’.

Max ‘I’ve just checked the account; we are £20,000 down. The money was moved out at 8.07pm last night’.

James immediately rang HMRC and told them his story of woe. They were sympathetic but not surprised and referred him to Action Fraud. The detective who rang him back was incredibly helpful and said that he had already been in touch with the bank, and he confirmed that not only had the £20,000 disappeared from their account, but it had been transferred to a business account of ‘Alan James Plumbing’. 

James was shocked as the owner was not only the guy who replaced their boiler, he was also a family friend. He rang Alan who was as shocked as he was. He had no knowledge of the transfer and immediately told him he would transfer the money back. He did so immediately.

The detective explained to them both that the fraudster was effectively using Alan’s account as a ‘holding account’ rather than transfer it directly to themselves. Sure enough, later the same day Alan the plumber was contacted by the fraudsters posing as HMRC. They explained that one of their data inputters had suffered ‘fat finger syndrome’ and mistakenly transferred £20,000 to his business account and they needed him to transfer it to another account. As discussed with the detective, Alan took the details of the account the money was to be transferred to, rang off and updated the detective.

Unfortunately, the account to which the fraudsters wanted the money to be transferred into was a payment-card account where there was no due diligence required by the bank to open it, and therefore no way of identifying the true owner. You can do it online in minutes. It is not an exaggeration to say that some of these accounts could be opened by Mr Donald Duck from The Big Pond, Essex. I’m struggling to see why such accounts exist, other than to enable fraudsters to disguise their true identity, and therefore reduce the ways in which police can trace them. 

Advice

• Another variation on this scam is to approach the victim via a text message rather than a phone call. HMRC never use text messages to do this – so if you receive one, it is certainly a scam!
• Even if the caller correctly quotes your National Insurance number that does not mean they are genuine. Data breaches occur all the time, and many of our personal details can be bought by fraudsters.
• Even if the number that appears on your phone is the genuine number for HMRC – beware. My earlier post regarding ‘spoofing’ allows fraudsters to display any number they want on your phone.
• If you receive any call from HMRC, take their number, any reference they can provide you with and ring them back FROM A DIFFERENT PHONE. This prevents them keeping the line open and fooling you into thinking that you are making a new call.
• Any calls outside of normal working hours are very suspicious. Fraudsters use this tactic to persuade you to transfer funds when your bank is closed and so you have no opportunity of stopping the transaction.
• Many people imagine all fraudsters to be men, whilst they majority certainly  are, female fraudsters also exist. This could mean that we subconsciously trust a female voice more than we should. This misplaced trust can be further amplified if the caller sounds particularly knowledgeable, educated, and professional, or alternatively overly friendly and helpful.

Don’t forget-fraud is all about mind games. Don’t get sucked in!