Taxman's scam warning: Fraudsters want your passwords

HM Revenue and Customs is warning taxpayers who file their tax self-assessments online to be especially wary of fraudsters after finding passwords for the service are being hijacked.

According to HMRC, a "small number" of users have had their details and passwords compromised by scammers, who made fraudulent tax refund claims through the account, hoping to route the refunds into their own pockets.

Around two-thirds of self-assessment tax returns were filed over the web this year with more than 5.7 million people using the online system.

While the HMRC refused to speculate on how the criminals got hold of users' passwords, phishing and keylogging viruses are potential avenues for the scammers.

"You've got to be careful with your password, careful with you personal information and careful with your IT," an HMRC spokesman said, adding: "This stuff is like gold dust to fraudsters."

The HMRC said however its systems are secure and it is working with the individuals affected and the police.

It's not the first time the HMRC has been targeted by the fraudsters: last month, the taxman warned of a phishing scam that claimed to come from the department, offering a refund. The phishing scam encouraged recipients to give their bank or credit card details in order to collect the supposed tax refund - leaving them open to having their bank accounts drained and the possibility of ID theft.