Overview
This APPG Summit brings together Parliamentarians, regulators, victim advocates, legal and financial experts, and those with lived experience to address the growing crisis of investment fraud and the harsh tax treatment of its victims by HMRC.
The event marks two major milestones:
• The official launch of the Investment Fraud Committee, co-chaired by Sarah Bool MP, Alex Sobel MP, Carly Barnes-Short & Margaret Snowdon OBE
• The formal launch of a national campaign to support victims of investment and pension fraud struggling with unfair tax liabilities whilst driving for much-needed policy updates at HMRC
Executive Summary
Our Summit will focus on a tragic and unfolding crisis – the decade-long suffering of UK citizens victimised by financial advisor fraud, who were mis-sold investment and pension products by unscrupulous and dishonest advisors. These victims, often left financially destitute, have not only been abandoned by the system in terms of their ability to get redress and justice, but are now being pursued by HMRC for tax liabilities, interest, and penalties despite them being victims of financial crime.
Their attempts to seek justice have been impacted by systemic failures within both HMRC and the justice system, leaving many feeling trapped in an unending cycle of debt, distress, and despair.
This summit will draw comparisons with other high-profile scandals, including the Post Office Horizon and Loan Charge cases, to expose the common thread of institutional failure and the blame-shifting that causes victims to suffer further, despite being harmed by fraud in the first place.
As the government considers granting HMRC even greater powers to pursue promoters involved in tax avoidance, this summit highlights why additional powers without fair treatment for victims could only serve to deepen the injustice and make the problem even worse.
We must ask: Is this the latest scandal waiting to unfold – one that could cause even greater harm to innocent victims?
The Victims Commissioners Letter to The Chancellor; and why it really matters
Victims Commissioner Baroness Newlove of Warrington wrote to The Chancellor following the Commissioners discussion with HMRC about these issues.
In her letter she called for an urgent review of HMRC’s treatment of certain fraud victims—many of whom are pensioners being asked to pay tax on precious savings lost to scams. The letter was prompted by a number of fraud victims (participants in the Summit) sharing their lived experience, expressing deep concern about how HMRC has treated them. HMRC’s treatment has compounded the trauma of losing life-changing sums of money to fraudsters – many of the victims are, understandably, suffering from PTSD.
In addition, Baroness Newlove highlights that despite dealing with traumatised victims, HMRC is not listed as an agency under the Victims Code; a matter that ought to be looked at.
The Letter to the Chancellor is available in full here.
Summit Goals
- To launch the Investment Fraud Committee and its campaign for fair treatment of fraud victims facing tax liabilities.
- To shine a light on the consequences being faced by victims, who are facing tragic outcomes, bankruptcy and have been deemed at risk of suicide by clinical psychologists due to the severity of the situation.
- To challenge the harmful false narrative that the victims are “greedy” or “tax avoiders” or “complicit” or “irresponsible” and call attention to their real status as victims of fraud.
- To seek a fair and proportionate settlement opportunity for historic victims.
- To call for an inquiry into HMRC’s role in the historic mistreatment of fraud victims and push for greater accountability in the way HMRC handles these cases.
- To raise awareness about the government’s proposed consultation to expand HMRC powers, and the potential injustice and risk of severe unintended consequences this poses to victims.
- To Launch a coordinated campaign to advocate for urgent reforms, including greater support; the creation of a redress scheme; and adoption of both the Victims’ Code code and much-needed policy changes at HMRC.
Key Issues to Address
- The Cruelty of Double Victimisation: Victims of financial advisory fraud have already suffered financial ruin and emotional trauma as a result of being scammed and being in dispute with HMRC for over a decade. HMRC’s pursuit of tax liabilities and punitive interest, and penalties on the money is inflicting additional suffering, leading to mental health crises and suicidal ideation for many.
- Failure of HMRC Policy: HMRC has no policy framework to protect fraud victims, and victims are instead treated as tax avoiders or reckless investors. There is no clear appeal mechanism or accessible legal recourse, leaving these individuals feeling abandoned by the system.
- The Risk of More Harmful Powers for HMRC: The government’s current consultation proposes expanding HMRC’s powers to pursue promoters and those involved in such schemes. Without appropriate safeguards, these expanded powers could make it even more difficult for victims to defend themselves against unwarranted tax penalties and interest.
- Lessons from Other Scandals: The treatment of fraud victims in the investment fraud space mirrors certain features of the systemic failures seen in the Post Office Horizon scandal and the Loan Charge scandal, where victims were initially blamed and left without justice for years. The summit will demonstrate how institutional inertia, plus a woeful lack of independent scrutiny and accountability allow these injustices to continue.
- Why are HMRC not utilising their considerable enforcement powers to investigate and prosecute offenders, and instead focusing all their resources on recovery from vulnerable victims?
- Are HMRC in breach of their own Charter; and if so, why?