How to avoid fraud and tax scams

How to avoid fraud and tax scams

Sadly, we are seeing a rise in sophisticated financial scams. If you fall victim, you are unlikely to get your money back. So, how can you avoid fraud and tax scams? Let’s look at what you need to be aware of before responding to an alleged “financial investigation”.

A recent type of fraud involves someone being contacted by a supposed financial organisation, such as HMRC or the Financial Conduct Authority (FCA). Fraudsters are using technology to create the illusion they are calling from an authorised body. This type of scam is very sophisticated and can affect anybody at any time.

Fake financial investigation about fraud

Carol (anonymised) rang her financial adviser to request encashment of all her investments. Carol’s husband had recently died and together they held £450,000 of investments in offshore bonds. She told her financial adviser that despite the fact these bonds were giving her an income of £2,000 per month, she still wanted them encashed but had no plans.

The sense of urgency in the call rang alarm bells for the adviser, who informed Carol that encashing this amount would create significant tax liabilities. It was advised to Carol that they needed the provider’s transaction history to demonstrate how she would be affected. Carol insisted she did not want to see tax calculations or an updated cashflow plan.

The financial adviser sought advice from others, and it was suggested Carol might be a victim of fraud, which turned out to be correct. Thankfully, due to the intervention of Carol’s financial adviser, the scam was stopped.

This is what had happened to Carol:

  • “an investigator from the FCA and her bank” – had cold-called Carol saying that someone had attempted to setup internet banking and buy airline tickets using her account.
  • Team viewer – they installed this viewing technology on her laptop.
  • Revolut – they opened this type of account using her name and registered her for internet banking.
  • “someone is trying to access your investments” – they told her she was a victim of fraud. They then said she needed to encash her investments to her “new” bank account, which of course, they could access.
  • “jeopardise [their] investigation.” – they then told Carol not to involve the FCA.

Victims of fraud are unlikely to get their money back

Unfortunately, it’s very difficult to get your money back, once you have given someone money or access to accounts. There are different ways fraudsters will try to scam you and access your money.

Two common ways people can be scammed:

  • Phishing texts and emails pretending to be HMRC – this is usually a text sent to your mobile phone or an email, stating you either owe tax or are owed a tax rebate by HMRC. The link supplied will ask you for personal information, which could include your bank account details. HMRC would never send a text or email in this way. Never click on any links in texts or emails unless you are sure of the sender’s identity.
  • Telephone calls pretending to be from an authoritative body – as was the case for Carol in our above example, you might receive a call from someone “investigating” your “compromised” account. Another similar scam is when people state that you either must immediately pay “overdue tax” or a “fraudulent claim” has been made in your name. Never give any cold caller your personal information.

How to avoid becoming a fraud victim

Some signs to watch out for if you have been contacted by someone apparently carrying out a financial investigation:

  • Always check the authenticity of cold callers – if someone calls to tell you that your account has been compromised, call your bank to check if this is true.
  • Never trust anyone who tells you not to talk to others – If someone asks you not to speak to advisers, family or friends, this is a sign it’s likely to be a fraud.
  • Never allow laptop installations by cold callers – once the fraudsters have access to your laptop, they could get access to your accounts.

If you have been contacted by someone and you’re unsure if it is a scam, please speak to our financial planners. We are registered and regulated by the Financial Conduct Authority.

If you need a financial review or investment advice, please get in touch with our financial planning team.


How Frauds Work and How To Avoid Being a Victim