There’s been a lot of comment over the last few weeks about scams where fraudsters use emails and text messages which appear to have come from HMRC to attempt to empty unsuspecting individuals’ bank accounts. Most of us would now be very wary of any text messages which seem to come from HMRC. But in an unexpected twist, a recent tribunal case has reported an example where a text message did prompt a taxpayer to bring his tax affairs up to date when the conventional route of reminder letters had failed. Indeed, the taxpayer argued that if HMRC had sent him a text message as soon as his return was late he would have filed promptly. Instead he had racked up penalties of £2,320 before he responded to the message and filed his returns.
The tribunal did not think much of his argument. It made it clear that HMRC has no obligation to send out reminders and went on to say ‘it is not down to HMRC to identify alternative means of communication with a taxpayer if the traditional method does not provide a response’. It also did not get involved in questions of HMRC’s protocols for the use of text messages.
Clearly, in this particular case the use of text messaging was more effective than traditional letters (there was some dispute over whether the taxpayer actually received the reminders to file a return) and it shows that text messaging does have its place in tax administration. As the use of digital tax accounts becomes more widespread, text messages may well become the preferred mechanism for alerting taxpayers of the need to access their account. I don’t have a problem with this provided that taxpayers know when to trust messages from HMRC. The department does publish a regularly updated list of the way in which it uses email and text messages. Ironically, the use of reminders to file tax returns doesn’t appear on the list - so if the taxpayer in this case had consulted the list he wouldn’t have believed it was from HMRC and might well have ignored it. Using new ways to communicate with taxpayers can clearly be effective, but HMRC needs to ensure that processes are constantly updated to make sure taxpayers can double check the credibility of genuine communications to protect taxpayers from scammers.
Two final points. First, the tribunal’s judgement includes the taxpayer’s mobile phone number, which can’t be right and surely breaches data protection regulations. And secondly, looking wider than the text message point, this is another case where the penalties are surely out of all proportion to the ‘offence’. The taxpayer’s income for both years in question was below the personal allowance and the penalties represented more than 10 per cent of his total income for that period. Reform is clearly urgently needed.
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