How to Stay Vigilant Against Tax Season Fraud Threats

As we approach the Self-Assessment deadline on January 31, 2025, we should be vigilant against the ever-evolving threat of fraud. HMRC’s recent press release underscores how important this is, revealing a significant increase in scam attempts targeting Self-Assessment customers. With nearly 150,000 scam referrals reported in the past year alone, the stakes remain high and persistent.

The rising tide of fraud

Fraudsters are becoming increasingly sophisticated, exploiting the tax season to deceive unsuspecting individuals. The HMRC report highlights that around half of all scam reports were related to fake tax rebate claims. This worrying trend reflects a 16.7% increase in scam referrals compared to the previous year. Such statistics are a reminder of the persistent and growing threat we face.

Recognising and combatting fraud

At Netwealth, our commitment to safeguarding our clients’ assets is unwavering. Drawing from a previous article on fraud, scams and financial crime, it is clear that a robust and proactive approach is essential. Fraudsters often employ tactics such as phishing emails, fake phone calls, and text messages to extract personal and financial information. Please note that HMRC will never contact you via email, text, or phone to announce a refund or ask for personal information.

Insights from the Financial Conduct Authority

Recent insights from the Financial Conduct Authority (FCA) further highlight the growing threat of investment scams and fraud. The FCA has reported a significant increase in scam warnings in recent years, which underscores the need for heightened awareness and proactive measures to protect consumers.

The FCA’s ScamSmart campaign continues to be a vital resource, offering guidance on how to avoid investment and pension scams. The campaign emphasises the importance of verifying the legitimacy of financial promotions and being cautious of unsolicited communications. Fraudsters often use sophisticated tactics, including fake FCA communications, to deceive individuals into divulging personal information or transferring funds.

In addition, the FCA has introduced new rules for firms promoting high-risk investments, aiming to enhance consumer protection. The measures are part of a broader effort by the FCA and financial services industry to combat the rise in online financial scams. These have become increasingly prevalent, and often result in the permanent loss of investment assets which have taken a lifetime to build.

Practical steps for protection

To protect yourself and your assets, consider the following steps:

• Stay informed: Regularly check the advice on the GOV.UK Phishing and Scams advice page to identify potential HMRC impersonation and other scam activity.

• Verify communications: Always verify the authenticity of any communication claiming to be from HMRC, the FCA, the police or any other official agencies or organisations.

• Verify investments, individuals and firms: Always verify the authenticity of any investment you are considering (and any adviser, influencer or other representative you are dealing with) using the FCA Register and ScamSmart as a reliable source of information.

• Report suspicious activity and fraud: Forward suspicious emails to phishing@hmrc.gov.uk and suspicious texts claiming to be from HMRC to 60599. If you do become a victim of fraud, you can find helpful advice and victim support on the City of London Police Action Fraud website.

• Use strong passwords and authentication: Ensure your accounts are protected with strong, unique passwords, and take advantage of multifactor authentication options wherever they are available – ideally through use of authenticator apps.

The key to combating fraud lies in fostering a culture of vigilance and awareness. At Netwealth we continuously review and enhance our controls framework to stay ahead of the curve. Our proprietary technology, combined with skilled human oversight, provides a robust defence against financial crime.

Conclusion

As we navigate the complexities of the tax season, we should remain vigilant and proactive in protecting ourselves and our assets from fraud. By staying informed and cautious, we can collectively thwart the efforts of fraudsters and ensure a secure financial environment for all.

Please note, the value of your investments can go down as well as up.