Five arrested after HMRC finds £500,000 online tax fraud

Police have arrested five members of a criminal cyber gang on suspicion of tax fraud, after they allegedly attempted to steal £500,000 by falsely claiming rebates using the identities of 700 British citizens.

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Police have arrested five members of a criminal cyber gang on suspicion of tax fraud, after they allegedly attempted to steal £500,000 by falsely claiming rebates using the identities of 700 British citizens.

HM Revenue & Customs is investigating the ‘cyber-attack’ after it found that a group of individuals were obtaining personal details from third parties to set up false self-assessment accounts with the intention of stealing tax rebates, reports The Guardian.

The arrest of a 35-year-old man from Bologna was made this weekend at Stansted Airport, as well as four others in London and Chatham, Kent. Italian state police responsible for investigating cyber-crime said that the man had applied for £500,000 in false rebates and had collected more than £100,000 over more than a year.

After the arrest of the Italian suspect, UK customs and revenue officials searched his apartment and removed computers.

A member of the Italian communications police said: “There must be a fault in the UK system to allow this kind of crime. We have not seen this kind of fraud in Italy because this kind of operation remains paper-based.”

However, Andrew Sackey, assistant director of criminal investigation, said that HMRC’s online systems proved extremely resilient to the online attacks, where they correctly identified and prevented the vast majority of false repayment attempts from the outset.

He said: “These arrests clearly demonstrate that we can, and will, apprehend those suspected of attempting to cheat UK taxpayers by defrauding HMRC, with international assistance if necessary.”

However, despite HMRC’s reassurances, the arrests do highlight the growing threat of online fraud as central government departments continue to overhaul legacy systems and create new digital products for citizens, as part of the Digital by Default agenda.

Ross Parsell, director of cyber security at defence company Thales UK, said that if Whitehall wants to be successful in its digital drive, it needs to put in place secure identity assurance platforms for users.

“In order for citizens and the government to get the most out of migrating certain interactions online, for instance collecting welfare benefits via Universal Credit, there is an overriding need to provide some form of secure identification credentials. Being able to verify, manage and protect the identity of claimants will be central to the success of the programme,” said Parsell.

“Although the Public Sector Network (PSN) will provide a secure back-end communications infrastructure, a question mark still remains over whether the government will be able to verify, manage and protect the identity of claimants.

“At the moment it’s possible to apply for a passport or renew a driving licence online, but in these cases citizens are making payments to the government. We are yet to have a government system which pays money in the other direction to the public which is where the risk lies. If a high percentage of transactions are fraudulent, the government could come under severe pressure.”

A recent Home Affairs Select Committee stated that the UK is losing the war on online criminal activity and the government is too complacent in targeting online criminals.