HMRC has so far launched over 12,000 probes into UK businesses over the misuse of coronavirus support schemes, including the furlough scheme, Self-Employment Income Support Scheme and Eat Out To Help Out.
New research by law firm BLM has revealed that, at the close of Q1 of 2021, HM Revenue and Customs had carried out over 12,000 probes into fraudulent uses of coronavirus support schemes.
According to the information found so far, the Coronavirus Job Retention Scheme (CJRS) had the highest number of formal compliances investigations undertaken.
This refers to investigations carried out by HMRC, with an interest to protect or recover funds lost to the UK through fraud, tax avoidance, evasion and non-compliance.
Furthermore, the Self-Employment Income Support Scheme had the second-highest formal compliance investigations (5,020) whilst Eat Out To Help Out had the fewest (424).
A previous report from the House of Commons Public Accounts Committee stated that there was “significant fraud and error in the furlough scheme”.
Based on HMRC figures, the body predicted there could be up to £3.5 billion of furlough payments being fraudulent or made in error.
However, the study adds that whilst investigations into misuse of coronavirus support schemes continue, there number of interventions will continue to rise, as further errors and fraudulent behaviours are uncovered.
HMRC has clarified that this data represented cases where the primary offence related to a coronavirus scheme, but it will likely have other cases outside of these schemes where coronavirus matters, whether fraud or other infringements form a minor aspect of the case.
This means the quantity of errors and fraudulent behaviour requiring intervention by HMRC may already be much higher than these current figures show.
Iskander Fernandez, partner and specialist white collar crime and investigations lawyer at BLM, said:
As is the case with any scheme where fiscal support is provided, loopholes will emerge that can be fraudulently exploited. In hindsight, it is easy to say that more should have been done by way of due diligence on each applicant but given the scale of the pandemic and all the uncertainty the nation was gripped with, it is hardly surprising that gaps emerged. Some fraudsters will have taken full advantage of the situation to line their own pockets.
As it takes time for HMRC to build a case, it’s unlikely that we’ll see an immediate wave of arrests and prosecutions. However, it’s a case of when, rather than if, given that thousands of interventions are currently underway.
Whilst some of these interventions could well be the result of unintentional error, the Treasury’s decision to invest £100m into a specialist coronavirus fraud taskforce shows that the government is clearly keen to crack down on any misuse of these schemes.
It’s still unclear as to whether this funding will be sufficient to tackle the level of suspected of fraud however, and what the make-up of the specialist task force will be.
Monica Sharma is an English Literature graduate from the University of Warwick. As Editor for HRreview, her particular interests in HR include issues concerning diversity, employment law and wellbeing in the workplace. Alongside this, she has written for student publications in both England and Canada. Monica has also presented her academic work concerning the relationship between legal systems, sexual harassment and racism at a university conference at the University of Western Ontario, Canada.
