UK tax office tricked out of millions by scammers

Police in the United Kingdom are hunting for a gang of online criminals that stole 47 million pounds ($63.9 million) from the agency that collects the nation's taxes.

The agency, which is known as His Majesty's Revenue and Customs, or HMRC, said the money was drained from tens of thousands of fake tax accounts created through a phishing scam.

The theft came to light this week, when two senior HMRC managers testified before the House of Commons' Treasury Committee, which comprises lawmakers from all of the major political parties represented in Parliament.

The senior managers told the committee HMRC has been contacting around 100,000 people who had online accounts associated with their names locked down following the "organized crime" gang's caper.

They said the breach began late last year.

John-Paul Marks, the HMRC's chief executive, told lawmakers on the committee that taxpayers who had accounts in their name drained of funds will not suffer any financial loss.

He said the gang targeted people paying so called pay-as-you-earn, or PAYE, tax.

"It's about 0.2 percent of the PAYE population, around 100,000 people, who we have written to, are writing to, to notify them that we detected activity on their PAYE account," he told the committee.

He said the people holding PAYE accounts are typically workers who pay income tax automatically out of their monthly earnings.

Marks explained that it looks as if the fraudsters had accumulated identity information about such individuals and then opened accounts in their names.

He said the gang then used those fraudulent accounts to attempt to collect money from the government, such as in the form of tax refunds.

The investigation conducted into the incident has extended beyond the UK, and some people have been arrested in connection with it, he added.

Angela MacDonald, the HMRC's deputy chief executive, told the committee the agency had also managed to make sure 1.9 billion pounds of money that was targeted by the scammers was not paid out.

HMRC posted a message on the UK government's website on Wednesday reiterating the fact that no one will suffer a financial loss because of the scam and noting: "This was an attempt to claim money from HMRC, not an attempt to take any money from you."

HMRC told the Reuters news agency the incident could not, correctly, be called a cyber-attack.

"It involved criminals using personal information from phishing activity or data obtained elsewhere to try to claim money from HMRC," the agency said.

An HMRC spokesperson added: "We've acted to protect customers after identifying attempts to access a very small minority of tax accounts, and we're working with other law enforcement agencies both in the UK and overseas to bring those responsible to justice."