How to protect yourself against pension and tax scams

Pension and tax scams are big business. These days I get so many dubious text messages about tax refunds, or emails offering me an unsolicited ‘pension review’. While I’ve managed to identify these messages as fraudulent, not everyone does. Pension and tax scams are big business. If they weren’t, the fraudsters wouldn’t bother.

With this in mind, now is a good time to look at how to protect yourself from pension and tax scams. HMRC recently issued some helpful advice about how to avoid getting scammed. I’ve summarised this for you and added some extra tips that I hope you’ll find helpful.

Don’t share your HMRC login details

One of the most important bits of advice is to never share your HMRC login details with anyone. HMRC will never ask you for them. Your accountant or tax agent don’t need them either, so should not ask you to share them.

The big problem with giving away your login details is that scammers can change your bank details. They’ll then make a fraudulent tax repayment claim and get the money transferred to their bank account, not yours. If this happens, you could have to pay back the full amount of the fraudulent claim.

HMRC tax scams

We recently published a post on bogus messages and phone calls that purport to be from HMRC. This helps you to spot tax scams, including rather alarming ones that claim HMRC is filing a lawsuit against you.

> Read more about HMRC scams

We’ve also published a post that looks specifically at tax refund scams. These are becoming ever more sophisticated, so it’s worthwhile familiarising yourself with the warning signs.

> Read more about tax refund scams

In brief, if anyone contacts you and claims to be from HMRC, be wary. Never give out personal or financial details in response to any unsolicited call, email or message. If someone tries to pressure you on the phone, hang up. If you are unsure about any communication, contact HMRC directly using the contact details provided here.

Don’t fall for tax refund companies

If you need to claim tax refunds or reliefs, our advice is to do so yourself or via a reputable tax agent such as an established accountant.

There are lots of companies out there that offer to claim tax refunds on your behalf. Sometimes they’ll give the impression they have HMRC approval – which they don’t. If you use one of these firms, you could find yourself paying exorbitant commission that’s as high as 50% or more.

HMRC has put tax rebate companies in its sights. In the meantime, we’d strongly advise against using them to make claims. You can claim tax refunds easily and for free. All you need to do is visit this page on the Gov.uk website and find out how to claim.

How to avoid pension scams

Many pension scammers will make generous offers in return for transferring your pension pot to them. Some will try and encourage you to release funds from your pension, which they then steal. Some people have lost their entire pension pots to scammers.

The Financial Conduct Authority has excellent advice on how to spot and avoid pension scams. However, these are some of the key warning signs:

• Unsolicited contact from a company
• Offering a so-called ‘free pension review’
• A promise of high returns
• Telling you that you can access your pension before the age of 55
• Pressure to act fast in order not to miss out on the deal

If you want to make changes to your pension, research the market and choose a reputable company. Reputable firms are listed on the Financial Services Register. Never respond to a company that contacts you out of the blue.

Don’t use call connection services

Lastly, HMRC advises you to be aware of call connection services. Companies that offer these will often advertise using search engine paid ads. They offer to put you through to HMRC, but will do so using a premium rate number. Some people have found themselves landed with a bill of over £100 as a result.

If you need to contact HMRC, only ever uses the 0300 helpline numbers listed on its website.

Be vigilant about pension and tax scams

We hope this collection of advice about pension and tax scams has been helpful. As you’ve seen, protecting yourself from the scammers is relatively easy – never give away your personal or financial details, always be wary of unsolicited messages and, if something sounds too good to be true, it almost certainly is.

As always, if you’re a THP client and you’re like any advice on tax planning or your accounts, feel free to get in touch.