The excuses made don’t hold water, but the same old rhetoric gets trotted out time after time. This festive season, I am heartened by the support of a number of influential Labour MPs. Although my letter to Santa won’t be answered this year, I am hopeful that a more modern, societal approach will emerge in the next couple of years. That will be too late for some victims, but better late than never.
A senior opposition spokesman last week observed that the current approach to fraud and fraud victims is antiquated – saying that we need a 21st Century solution for a 21st Century problem. Music to my ears. The annual loss to financial fraud in the UK is off the scale and amounts to more than we pay each year to the NHS. Think what we could do with even some of that money, yet very little is done. We seem to accept it as a cost of doing business. Apparently, one of the reasons we are around the top of the league table of scammed nations is because we speak English, leaving us vulnerable to overseas operators who speak English very well. But it’s also because we’re a soft touch.
We don’t have the resources or the will to go after fraudsters, so they keep on stealing. When we catch them we levy a small fine, bar them from acting as advisers, or administer a slap on the wrist. Prosecution takes years, but which time a lot of information has been lost and assets disposed of. Meanwhile, victims who were defrauded are punished for making a horrible mistake, sometimes threatened with bankruptcy and having possessions seized by bailiffs.
Why do we allow this? Frankly it’s because we’ve failed to recognise the problem – our gaze is elsewhere and has been for years.
Questions to government generate the same response along the lines of “The tax charge is there to deter tax evaders” and “It is only fair to claw back the generous tax relief we gave to the victims while they saved into their pension” and most egregious “We don’t levy a tax charge on the savings that victims lose to scammers”. REALLY? I think we can all relate to the deterrence point, but how can a deterrent work if ordinary people don’t know that what they are being advised to do by a professional is against the rules? It has happened to thousands of people – can they all be in on the scam as HMRC believes? How many readers of this blog, who work in pensions, are aware there is a tax charge of 55% levied on transfers to a scheme that is on the HMRC register but turns out to be a scam?
Government believes HMRC is generous to only charge 55% on any sum a victim may have received from the scam (marketed as tax free cash) rather than (hold the phone) the whole transfer value. Yes, it is quite true that a fraud victim could be taxed at 55% on savings that have actually been stolen.
Victims are not the only losers here. The government is losing too, as are employers who paid contributions into the victim’s pension scheme and by extension, so are all of us. The only winners are the scammers. The human cost to victims is estimated by Which? at around £7.2bn. This does not include the pro bono time various organisations and individuals spend trying to help victims and it doesn’t include the costs incurred by HMRC and its advisers in pursuing victims as relentlessly as they do.
HMRC only does what parliament asks it to do, in which case, the answer is that parliamentarians must force a change. As I write this, Christmas is coming and so are reminder letters from HMRC to victims, informing them that another 8.5% interest has been added to their tax charge. Let’s ring in the New Year with an independent inquiry, a public awareness campaign and a focus on criminals rather than victims.
Margaret Snowdon, Chair of PSIG
