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Tips on avoiding tax scams

AS THE FESTIVE SEASON draws nearer, HMRC is warning millions of Self Assessment customers to be aware of fraudsters in the run up to the 31 January tax deadline. Cyber criminals are taking advantage of “reminder” SMS messages and bogus emails during the festive season to trick taxpayers out of their money.

Just in the last year, HMRC received nearly 900,000 reports from the public about suspicious HMRC contact – phone calls, texts or emails. More than 100,000 of these were phone scams, while over 620,000 reports from the public were about bogus tax rebates.

Cyber criminals are taking advantage of “reminder” SMS messages and bogus emails during the festive season to trick taxpayers out of their money.

At Shipleys Tax we look at some of the most common techniques fraudsters use to entrap taxpayers and what you should do if you suspect foul play.

Faking it

Probably the most common methods we come across that fraudsters use includes:

• Phoning taxpayers offering them a fake tax refund

• Leaving a voicemail message threatening enforcement action or imprisonment if a bogus tax bill is not paid immediately

• Pretending to be HMRC by texting

• Emailing a link which will take customers to a false page, where their bank details and money will be stolen.

…taxpayers should never give out private information, reply to text messages, download attachments or click on links in texts or emails, even if it looks like a message from HMRC…

Taxpayers need to recognise the signs to avoid becoming victims themselves. HMRC, like other genuine organisations and banks, will never contact customers asking for their PIN, password or bank details. HMRC also do not email taxpayers direct.

Needless to say, but taxpayers should never give out private information, reply to text messages, download attachments or click on links in texts or emails which they are not expecting, even if it looks like a message from HMRC complete with logo and branding.

What should you do if you suspect a scam?

• Number one rule: do not respond. Always check with your professional adviser (or HMRC direct) regarding the status of your tax affairs.
• HMRC operates an inbox for people to report suspicious emails to, at phishing@hmrc.gov, while SMS messages should be forwarded to 60599.

• If you have suffered financial contact your bank immediately and report it to Action Fraud online at actionfraud.police.uk or by calling 0300 123 2040.

As always, if in doubt check and check again before taking any action.

If you are affected by any of the issues above and would like more information, please call 0114 272 4984 or email info@shipleystax.com.

Please note that we do not give free advice by email or telephone.

FOR MANY BUSINESSES, COVID-19 has caused a massive shock and presented previously healthy companies with a terrible set of challenges. With no income and losses mounting, managing cash flow to stay afloat is vital.

One way to boost cashflow is to tap into tax previously paid by a business. There is a little-known way in which businesses can claim tax back from HMRC even before the losses have been realised. Known as a “provisional loss carry-back claim”, businesses that were previously profitable but are now potentially loss-making, can apply for this to get cash back. This could significantly help cashflow and may even help the business survive.  

In today’s Shipleys Tax brief, we look at this valuable mechanism and how it works.

One way to boost cashflow is… a little-known way in which businesses can claim tax back from HMRC even before the losses have been realised

What is a provisional loss carry-back claim?

A “provisional loss carry-back claim” is a claim by which a business, in exceptional circumstances and set to make a loss, can reclaim tax back for corporation tax paid to HMRC on profits made in a previous accounting year. COVID-19 qualifies as such an exceptional circumstance.

HMRC has updated its company tax guidelines detailing how businesses who wish to make claims for repayments of corporation tax based on anticipated losses can make the claim.

…a business can reclaim tax back for corporation tax paid to HMRC on profits made in a previous accounting year.

How do you qualify?

Any submission to HMRC requesting an early claim to carry back of losses will need to show

• there is sufficient evidence that losses will be incurred; and
• that it will be included in the company tax return for the loss making year when it is eventually submitted.

In the current climate this should not be too difficult to do. For example, the business will need to show evidence of the following for the current period:

• Significant losses – that would exceed other income
• Management accounts showing losses
• Accurate forecasts
• Board minutes where financial performance was noted
• Consideration of whether performance could improve over the remainder of the accounting period

Providing an acceptable form of evidence is therefore critical to the timely success of a repayment and liaising with your professional adviser is crucial.

Providing an acceptable form of evidence is therefore critical to the timely success of a repayment and liaising with your professional adviser is crucial.

What are the next steps?

Businesses would need to look to prepare and finalise their accounts to quantify any losses that could be claimed by the company. It is possible, together with the aforementioned supporting evidence, to agree a provisional loss carry-back claim with HMRC, potentially enabling a business to claim anticipated losses immediately rather than having to wait for years thereby boosting cashflow now when its most needed.

If you require any assistance compiling and submitting an early loss carry back claim to HMRC in order to try and aide cash flow, please contact us 0114 272 4984 or email info@shipleystax.com and we would be delighted to help you with your claim.

Please note that we do not give free advice by email or telephone.

IN A BID to tackle the hidden economy, taxi and private hire drivers will need to undergo tax checks for applications to renew their licences the Government has published.

The new rules will target individuals, partnerships (including LLPs) and companies applying for licences in England and Wales to either drive taxis or private hire vehicles (PHVs), or both, operate a PHV business or deal in scrap metal.

In todays tax note, Shipleys Tax assesses the potential wide ranging impact this will have on individuals, their businesses and families.

The new rules will target individuals, partnerships and companies applying for licences in England and Wales to either drive taxis or private hire vehicles (PHVs), or both, operate a PHV business…

What is being proposed?

Licensing authorities will introduce a “tax check” on registration for renewed applications in England and Wales for licences to: 

• drive taxis and private hire vehicles (PHV)(for example, minicabs)
• operate a PHV business
• carry on the business of a scrap metal dealer on a site
• carry on business as a mobile collector of scrap metal.

Licensing authorities will introduce a “tax check” on registration for renewed taxi/PH applications in England and Wales for licences…

What does this mean?

This means an applicant who wishes to renew a licence will need to undergo a tax check before the licence is renewed. The licensing body (typically a local authority) will have to obtain confirmation from HMRC that the applicant has completed the check before being able to consider their renewed licence application. This in effect means that the licence holder will have to hope for a clean bill of health from the taxman before any licence renewal application will be considered.

Licensing bodies will be required to:

• signpost first-time applicants to HMRC guidance about their potential tax obligations
• obtain confirmation that the applicant is aware of the guidance before considering the application
• where the application is not a first-time application (a renewed application) the licensing body must obtain confirmation from HMRC that the applicant has completed a “tax check”. 

Why is the government doing this?

This is a small but significant step as part of a wider programme to tackle the so called “hidden economy.” The government believes there are individuals and businesses with sources of taxable income that are entirely hidden from HMRC which is depriving the government of funding for vital public services.

They believe people operating in the hidden economy do so because they are perhaps unaware of or confused about their tax obligations. Or if they have been hiding their income for a long period, they are also likely to find it harder to come forward and tell HMRC that they are, or should have been, chargeable to tax (‘registered’).

This is a programme to tackle the so called “hidden economy.” The government believes there are individuals and businesses with sources of taxable income that are entirely hidden…

By making access to the licences taxi/PHV drivers need conditional upon completing a tax check, the government believes the rules above will help applicants for certain public sector licences better understand their tax obligations.

Impact on individuals, households and families

At Shipleys Tax we support any well thought out measures which help people meet their tax obligations. However, the use of a blunt instrument to target what could be complicated tax affairs seems grossly unfair. Experience has shown HMRC are underfunded, understaffed and prone fatal inaccuracies resulting in the taxpayer being unduly penalised and ultimately being forced to into defending themselves, sometimes through no fault of their own.   

The measures will have a material impact on employed drivers and on drivers, PHV operators and scrap metal dealers who are self-employed. All of these will need to complete a tax check when applying to renew licences. If individuals do not complete a tax check the licensing body will be unable to consider their application to renew their licence and their current licence will expire.

… the use of a blunt instrument to target what could be complicated tax affairs seems grossly unfair.

This could have an impact on family formation, stability or breakdown if individuals will no longer be licensed and individuals and their families would have less disposable income.

When are the measures expected to be introduced?

Budget 2020 announced that the government will legislate in Finance Bill 2020-21. The technical consultation for hidden economy conditionality will run until 15^th September 2020 with changes taking effect from April 2022.

If you are affected by any of the issues above and would like more information, please call 0114 272 4984 or email info@shipleystax.com.

Please note that we do not give free advice by email or telephone.