UK producers have raised the alarm over a spate of letters claiming to be from UK tax authority His Majesty’s Revenue and Customs (HMRC) that have been posted to producers’ registered company addresses in recent months, asking them to visit a scam website to “review your VAT repayment allowance”.
The letter encourages producers to hand over confidential information via a link. It claims HMRC is attempting to “streamline VAT payments for the film industry” and “limit cash flow disruption for priority businesses during repayment cycles”.
VAT, or value-added-tax, is a tax added to most products and services, of which the standard rate is 20% in the UK. VAT-registered businesses can claim back VAT spent on goods and services used wholly for business purposes, such as camera suppliers, crew, caterers and locations. VAT repayments are a significant part of the cash flow for independent UK productions.
The letters include convincing levels of specific and personal detail. It is not known how many producers have received similar letters, but around 40 people who are part of UK online producers’ network Producers’ Anonymous have come forward to say they have been sent the letter.
The letter also includes the threat: “Your business has been identified as requiring this step. If you do not provide notification before the due date of your next return, any claims on VAT made will be held for review.”
UK producer Oliver Roskill of Record Player Films, who is also co-founder of The Hacking Games, a company that aims to create a generation of ethical hackers to oppose cybercrime, received one of the letters. “It’s actually very slick, but their error was it didn’t come in a brown letter [as HMRC communication typically does] and when you opened it up, it had a photocopy line through it. But everything else was immaculate,” he said.
An HMRC spokesperson told Screen: “We are aware that fraudsters use fake letters, emails, calls and texts to impersonate us and trick people into sharing sensitive information. Criminals are great pretenders and often mimic government messages to appear authentic.
“Unexpected contacts like these should set alarm bells ringing, so take your time and check our scams advice on GOV.UK.”
Such VAT scams are not limited to the film industry, with 23,000 scam websites understood to have been reported by HMRC for takedown over the past year. However, VAT fraud has proven a major issue for independent producers over the past 18 months and shows little sign of easing.
Farah Abushwesha, producer at Rocliffe, said she registered a new special purpose vehicle (SPV) with HMRC, as is common for individual film productions, for a project in autumn of last year, only to find the bank account details had been changed to an unknown UK bank account. She was therefore unable to file VAT returns and is still out of pocket.
Last year, Screen reported a spate of suspected cases of fraud involving the VAT accounts of UK producers. A person not known to the company was able to obtain a production’s VAT number, lock the producer out of their account, and make VAT repayment claims. Abushwesha noted, in her instance, she was not locked out of her account.
Producers are calling for more direct, human engagement with the independent film production community from HMRC.
HMRC’s advice remains to visit its website for advice on spotting scams.
Producers are also calling for increased verification steps to help prevent scammers from accessing producers’ government gateway ID numbers, used to access government and tax portals, and change bank account details on VAT claims. HMRC has repeatedly told Screen it is improving its security measures but has not provided further detail on what stricter authentication procedures it is looking to enforce.
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