HMRC must target the scammers and stop hounding victims, says chair of the Pension Scams Industry Group

Ms Snowdon, who is chair of the Pension Scams Industry Group, said there were some parallels with the loan charge, a controversial tax policy which has seen people on modest incomes hit with life-changing tax bills after taking professional advice.

She added: “The way HMRC treats the victims of these scams has been awful; the pattern of behaviour, which has also been seen with regards to the loan charge, is that HMRC blames the victims.

"They seem to be taking no action against the scammers and criminals behind these schemes.

"Other countries, such as the US are taking action against these scammers, but in the UK they don't seem to face any repercussions.”

Ms Snowdon, who was was an independent member of the original Treasury Steering Group for the Pensions Dashboards project, said: "In the US fraud victims are given tax relief. Here in the UK it's estimated that scammers have a one in 3,000 chance of being caught.

"HMRC are going after the low hanging fruit and missing the bigger picture. Fraud costs the UK economy around £137b a year, that's a huge proportion of GDP. This fraud is causing a lot of pain for people. HMRC must start to treat the victims of fraud as victims. There are parallels with the loan charge; people were misled by experts and then punished for doing what the experts say.

"We have found that HMRC are not just taxing them but hounding them,’’ she added. “They should devote this energy into going after the scammers instead. The people affected by these scams are suffering because they feel guilty about being fooled and sometimes they don't even tell their families. That drives a wedge in relationships. There have been marriage breakdowns and people have lost their homes.

"The experts they trusted weren't as smart as they thought or they deliberately lied. Anybody anywhere could be the victim of clever people.

"One of the drivers of these scams is a lack of deterrence. HMRC should display more empathy and sympathy and go after the scammers instead.

"HMRC should live up to its charter and should also employ people who are knowledgeable about the massive increase in scammers and fraud."

Last month, a report by the Investment Fraud All Parliamentary Group concluded that HMRC is levying tax charges against investment and pension fraud victims rather than the perpetrators of the crimes.

An HMRC spokesperson said: “We are sympathetic to victims of fraud and we recognise that individuals may have lost money by entering these types of arrangements. We do not tax pension savings lost to fraud. However, we will tax amounts that individuals release, or attempt to release, from their pensions where this is not authorised in law.”

HMRC takes a supportive approach to dealing with taxpayers who have tax debts, including offering Time to Pay arrangements where appropriate, the statement added.