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business focus


Chartered accountants Haines Watts presents a series of articles based on its blogs. It offers analysis, reviews and comments and welcomes your feedback at hwca.com/blog


of the month


Referee! Please check the penalty system Writes Peter Wright, partner at Haines Watts


What do you think of the HMRC’s penalty system? Do you think it’s fair – or otherwise. Many people know that as part of their measures for ensuring compliance with the UK taxation system, HMRC applies a penalty regime for late registrations and returns, as well as for errors or mistakes in returns. And most people would accept that there should be some form of penalty for non-compliance.


Most business owners would also no doubt agree that a penalty system should be simple, flexible, proportionate and tailored – one in which penalties are only issued


when they are deserved. Unfortunately, however, the view of many taxpayers is that the current system applied by HMRC is increasingly moving in the opposite direction.


There are several reasons for this:


• The volume and complexity of tax legislation and the emphasis on taxpayers having to make returns even when they are ‘nil’ returns.


• The move to a digital platform with automatic penalties for non-compliance.


• The reduction in human interface at HMRC.


• The view of Government/ HMRC that penalties are a source of income.


This is backed up by official statistics. In the tax year 2012/13 penalties were issued to 5,369 taxpayers on the grounds of ‘deliberate’ behaviour such as understating income. In the following tax year, this figure had risen almost three-fold to 14,760. So is it becoming all about raising income for the HMRC coffers?


However much as we may complain about the level of taxes in the UK, respect for the tax system is still a vital part of our democracy. In moving


Could your company be at risk?


‘Bogus boss’, ‘whale phishing’, ‘insider spoofing’, whatever you call it, CEO (managing director/finance director) fraud email scams are a serious issue with some UK companies reporting losses of up to £18.5m


The threat of the CEO fraud email scam


The scam is relatively straightforward however, it does require criminals to acquire certain information including:


• The company’s hierarchy.


• The names and email addresses of employees who can initiate payments and/or money transfers.


• The day-to-day schedule (and any upcoming holidays) of the intended target.


Once the fraudster has this information, he/she can create an email account that looks legitimate. Generally by using one of the following strategies:


• Registering a domain similar to the company’s, for example,


firstname.surname@example. com (original) and firstname. surname@example.com (fraudulent).


• ‘Spoofing’ the genuine email address, which is when fraudsters use a genuine email address but their own domain, for example, firstname. surname@fraudsterdomain. com.


Once created, the fraudster will use the email to contact an employee who is able to issue a money transfer and make an urgent request to wire money to a specific financial institution. Since the email address looks legitimate, the employee generally doesn’t have any reason to believe the request is fraudulent.


THE BUSINESS MAGAZINE – THAMES VALLEY – APRIL 2017


How can you protect your company?


1 Verify any payment requests that are unexpected or unusual either over the phone or in person. Don’t use the contact details provided in the potentially fraudulent email.


2 Establish a process for requesting and authorising payments that requires two points of contact.


3 Organise a procedure for what employees should do if they receive an unusual or suspicious email asking them to authorise a money transfer.


4 Provide your staff with cyber security training to ensure that they know how to identify and manage cyber security threats.


5 Choose your social media friends carefully – befriending targets using bogus social media profiles to find out personal information is a common cyber- criminal tactic.


CEO email fraud could be devastating, costing you in lost funds, lost business or fines. It makes sense therefore to implement precautions to help safeguard your business. For information or advice see details below.


Simon Corderoy 07980 894917


Adam Jeffs 07748 647673


• Source Zywave: Cyber Risks and liabilities – Combatting bogus boss email scams


to a digital tax arrangement it’s important that HMRC reassesses its penalty regime; too many innocent businesses are being punished and, as a result, are beginning to lose faith.


For further information: hwca.com


Jelf is a trading name of Jelf Insurance Brokers Ltd (Reg No. 0837227), which is part of Jelf Group plc (Reg No. 2975376) and is authorised and regulated by the Financial Conduct Authority (FCA). Registered address: Hillside Court, Bowling Hill, Chipping Sodbury, Bristol BS37 6JX (Registered in England and Wales). Not all products and services offered are regulated by the FCA. JIB061.03.17


businessmag.co.uk


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