Fraud & scams businesses need to watch out for 2023

A deeper look into the types of Fraud

There are many different types of fraud that businesses can fall victim to. Some of the most common types of fraud include:

Cloned invoice scam: In this scam, fraudsters send an invoice to a business that appears to be from a legitimate supplier. However, the invoice is actually fake and the money paid to the fraudster is never received by the legitimate supplier. The fraudsters often clone the email address of the legitimate supplier and send the invoice from that address. They may also use a fake website that looks like the website of the legitimate supplier.

• To protect yourself from a clones invoice scam, be sure to verify the identity of the supplier before making any payments. You can do this by calling the supplier directly or by checking their website for a physical address.

VAT refund scam: In this scam, fraudsters contact a business and claim that they are entitled to a VAT refund. The fraudsters will often provide the business with false documentation in order to support their claim. Once the business has paid the refund, the fraudsters disappear and the business is left out of pocket.

• You can protect yourself from this scam by verifying the identity of the person or company requesting the refund. You can do this by calling the supplier directly or by checking their website for a physical address.

Fake tax authority scam: In this scam, fraudsters contact a business and claim to be from the tax authority. They will often say that the business owes money in taxes and that they need to pay immediately. The fraudsters will often provide the business with false documentation in order to support their claim. Once the business has paid the money, the fraudsters disappear and the business is left out of pocket.

• Be sure to verify the identity of the person or company contacting you. You can do this by calling the tax authority directly or by checking their website for a physical address. Do this and it will help you avoid this scam.

Overpayment scam: In this scam, fraudsters contact a business and claim to have overpaid for goods or services. They will often ask the business to refund the overpayment, but the refund will actually go to the fraudster.

• Similar to other scams of this nature, be sure to verify the identity of the person or company requesting the refund. You can do this by calling the supplier directly or by checking their website for a physical address.

Fake bank transfer scam: In this scam, fraudsters send a fake bank transfer to a business. The bank transfer will appear to be from a legitimate source, but it is actually fake. Once the business has spent the money, the fraudster will withdraw the money from the bank account and the business will be left out of pocket.

• Again, verification of the identity of the person or company sending the bank transfer is the key. Do this by calling the bank directly or by checking their website for a physical address.

HMRC Related Scams

HMRC related scams are a type of fraud that target businesses and individuals. These scams often involve the fraudster pretending to be from HMRC and demanding payment for a tax bill that does not exist. Other HMRC related scams may involve the fraudster asking for personal or financial information in order to steal the victim’s identity.
Here are some examples of HMRC related scams:

Scams involving tax refunds:

These scams typically involve scammers sending emails or making phone calls claiming to be from HMRC and offering a tax refund. The scammer will then ask for personal or financial information in order to process the refund. HMRC will never contact you by email or phone to offer a tax refund. If you receive such a communication, it is a scam.

Here is an example of a scam email that may be sent by a fraudster:

This link will take you to a fraudulent website that looks like the HMRC website. If you enter your personal information on this website, the fraudster will be able to steal your identity.

Scams involving penalties and fines:

These scams typically involve scammers sending emails or making phone calls claiming to be from HMRC and saying that you owe a penalty or fine. The scammer will then ask for payment in order to avoid further action. HMRC will never contact you by email or phone to demand payment for a penalty or fine. If you receive such a communication, it is a scam.

Here is an example of a scam phone call that may be made by a fraudster:

This is a scam. HMRC will never call you and demand payment for a penalty or fine. If you receive such a call, hang up immediately.

Scams involving identity theft:

These scams typically involve scammers sending emails or making phone calls claiming to be from HMRC and asking for personal financial information. The scammer will then use this information to commit identity theft. HMRC will never contact you by email or phone to ask for personal financial information. If you receive such a communication, it is a scam.

Here is an example of a scam email that may be sent by a fraudster:

This link will take you to a fraudulent website that looks like the HMRC website. If you enter your personal information on this website, the fraudster will be able to steal your identity.

VAT Scams & Fraud

AT fraud is a type of tax fraud that involves the fraudulent evasion of Value Added Tax (VAT). VAT is a consumption tax that is added to the price of goods and services at each stage of the supply chain. Businesses that are registered for VAT are required to collect VAT from their customers and then pay it to HM Revenue and Customs (HMRC).

There are a number of ways that scammers might use to commit VAT fraud against unsuspecting businesses. Some of the most common methods include:

Missing trader intra-community (MTIC) fraud: In this type of fraud, the fraudster sets up a fake business and registers for VAT. The fraudster then buys goods from legitimate businesses within the European Union (EU) and claims the VAT back from HMRC. However, the fraudster does not actually sell the goods and does not pay the VAT to HMRC. This type of fraud is known as MTIC fraud because the fraudster is missing from the supply chain.

Invoicing fraud: Here, the fraudster sends an invoice to a business for goods or services that have not been ordered. The invoice may look like it is from a legitimate business, but it is actually from a fraudster. The fraudster will then ask for payment for the invoice. If the business pays the invoice, the fraudster will keep the money and the business will not receive the goods or services.

Refund fraud: The fraudster will make a fraudulent claim for a VAT refund from HMRC. The fraudster may use a fake VAT registration number or they may claim for a refund for goods or services that were not actually sold. If the fraudster is successful in claiming the refund, they will keep the money and HMRC will lose out on the VAT revenue.

VAT fraud is a serious problem that can cost businesses and HMRC a lot of money. Businesses can protect themselves from VAT fraud by being aware of the different types of fraud and by taking steps to prevent fraud, such as:

• Checking the identity of their suppliers: Businesses should check the identity of their suppliers before they do business with them. This can be done by checking the supplier’s VAT registration number and by asking for references.
• Only paying invoices from legitimate businesses: Businesses should only pay invoices from businesses that they know and trust. If an invoice looks suspicious, the business should contact the supplier to verify the invoice.

Reporting suspicious activity to HMRC: Businesses should report any suspicious activity to HMRC. This can be done by calling the HMRC fraud hotline on 0800 788 887. Find out more about reporting fraud on HMRC’s website here.