Victims of pension fraud have become suicidal after being hounded by tax officers, an influential group of MPs have said.
In a damning report, the All-Party Parliamentary Group (APPG) on investment fraud has accused HMRC of “re-traumatisation”. Fraud victims And inflict “devastating” emotional and financial damage on individuals who have already lost much of their savings as they chase tax debts.
It heard from fraud victims who were hit with tax bills after accessing their retirement savings early through “pension release” schemes run by criminal gangs.
The APPG, which was set up in June, claimed several victims of fraud were forced to attempt suicide after HMRC pursued them over their tax liabilities arising from pension and investment plans.
One of the victims told the cross-party committee about this HMRC was pursuing him For £90,000 in back taxes after his pension was stolen.
The parliamentary group heard that he was forced to borrow money from family members to pay the bill, after members of HMRC’s field force unit came to his home and asked him how much his car was worth when assessing his ability to pay.
Another victim said that he became suicidal after being accused of this Tax evasion by HMRC His case has been under investigation for more than nine years.
He told the APPG investigation: “When HMRC contacted me in a very aggressive way and accused me of tax evasion, and threatened me with enforcement, it took me back to the mindset of when I first lost my pension.
“I felt like a failure, I had lost everything, and I felt like I had no future.”
Others said they and their families had fallen ill because of the stress of waiting for demanding letters from the tax office.
Caroline Nokes, MP for Southampton North and Romsey and co-chair of the APPG, said: “HMRC contributes to poor mental and physical health outcomes for victims, with barely any policies or protection in place.
“Witness accounts were heartbreaking and painted a picture of misery and complete disregard for the welfare of the victims.
HMRC’s focus should be on stopping these frauds at the source and holding perpetrators to account – not persecuting the victims.
Pensions scams are costing savers more than £26 million Between 2020 and 2022, based on a freedom of information request from the Institute of Pensions Administration.
Of the 1,595 pension scams reported between 2020 and 2022, 1,185 were cases of ‘pension release scam’, where a fraudster tricks someone into taking their pension early.
Victims of these scams face tax charges of up to 55% from HMRC if they withdraw money before the retirement age of 55.
Gangs often tell victims that there is a legal loophole that prevents them from paying taxes.
Sports professionals and military veterans are among those targeted by scammers over their retirement savings, the APPG heard.
HMRC has a legal duty to collect all debts owed to the taxpayer and offers support to tax debtors such as repayment schemes.
However, a committee made up of cross-party MPs and peers called for the immediate suspension of charges against the victims, an independent government review and reform of HMRC.
Rick Muir, director of the Police Foundation, a think-tank, said: “The government must take this report seriously and immediate action must be taken.
“The ‘double victimization’ scandal must end: HMRC should not prosecute victims of fraud in relation to tax liabilities incurred as a result of the fraud.”
An HMRC spokesperson said: “We do not tax victims of fraud on the income they have lost if the scheme they entered was permitted within tax legislation. If a customer enters an avoidance scheme, and is subsequently defrauded out of the tax avoided, they will still be liable.” Payment of the original tax due under the law.
“Clients should be very careful when considering entering into any scheme as they are legally responsible for their own tax affairs. If something sounds too good to be true, it almost certainly is.”
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