Fraudulent tax refund

Thought it might be a good idea to share this incident with you fellow accountants as the implications are far reaching for those dealing with personal tax returns.

A client recently received from HMRC a notice confirming a tax refund of just under £3,000. The client rang me and I stated that he was not due a refund in any way shape or form.

I immediately logged onto his self assessment account with HMRC, low and behold, I could not access the account. Clearly the password had been changed. We immediately requested a new password and gained access.

To our horror the client's HMRC account had been somehow hacked and a return submitted for 2009/10 showing the client had worked for a bogus company and had earned £24,000 with tax deducted of some £6,000. I can only assume the PAYE reference stated on the return was also bogus. This resulted in the client being due a refund of said £3,000. However the nominee's details were also changed to include a new bank account with LloydsTSB. The tax return was dated 20 April 2010 and the refund issued on 21 April 2010.

All this now leaves the client with a self assessment account that has been corrupted. We have spent hours on the phone trying to contact HMRC regarding this fraudulent activity all to no avail. There does not appear to be a department within HMRC that would deal with fraud of this nature. The matter is now in the hands of the Metropolitan Police E-crime unit.

Has anyone else experienced  this situation and what do you do to resolve the issue of a corrupted SA account with HMRC?

If this isn't a data protection issue I don't know what is! Lost HMRC laptop on a train or taxi cab perhaps!!!

Any assistance would be very much appreciated.