Authorities are moving fast to clamp down on Covid-19 support fraud

The Coronavirus Job Retention Scheme (CJRS) has been a lifeline for many companies and their employees this year.

Over £38 billion has been paid out to provide support for some nine million jobs with 1.3 million employers. 

 

By any standard it’s been a mammoth operation to arrange and has undoubtedly kept several positions and businesses afloat that would otherwise have gone through no fault of their own. 

 

Sadly, with such large sums in the open, some companies and individuals are taking advantage of the scheme’s generous sign-up criteria to apply for funds they aren’t entitled to.

 

This isn’t even taking account of outright criminality from individuals who are inventing companies, employees and identities to exist just long enough to receive a payment before disappearing forever. 

 

Or so they think. 

 

HMRC have displayed remarkable forbearance to this point to allow the natural range of mistakes and errors that will come about from businesses having to learn a complicated new system quickly and act to access funds that might be the difference between their survival or failure. 

 

Now they and other law enforcement agencies are actively looking for examples of fraud from earlier in the year involving Covid-19 support schemes and arrests are taking place as a result. 

 

Last week three people were arrested in Birmingham as part of an ongoing investigation into £145,000 of fraudulently obtained Bounce Back Loans. 

 

Michael Dineen, Deputy Director of Operations with the National Investigation Service (NATIS) said: “This is the first of many operations planned by my officers to target the abuse of the Bounce Back Loan Scheme. 

 

“We will continue the great work seen here, alongside our colleagues from other Law Enforcement agencies, to catch and prosecute these criminals.”

 

The arrests this year also happened in the West Midlands in July regarding a £495,000 CJRS fraud investigation when nine men were arrested on suspicion of cheating the public revenue, fraud by false representation, VAT evasion and money laundering.

 

Additionally, HMRC’s scope is widening as another three men were arrested in London for offences relating to suspected illegality involving the “Eat Out to Help Out” scheme in August.

 

A spokesperson for HMRC said: “The schemes were part of a collective national effort to protect jobs and we take any claims of fraud related to it seriously. 

 

“We’d ask anyone concerned their employer might be abusing any schemes to contact us too.”

 

Some examples of fraud include not paying workers what they’re legally entitled to; asking them to work while they’re on furlough or claiming furlough pay on their behalf while they’ve been working. 

 

Another reason HMRC are keen to be seen acting proactively is a report from the National Audit Office (NAO) that indicated that up to £26 billion would not be repaid to the Bounce Back Loan scheme due to fraud and a wider inability to repay. 

 

Head of the NAO Gareth Davies said: “Government will need to ensure that robust debt collection and fraud investigation are in place to minimise the impact of these potential losses to the public.”

 

BBLS loans are due to begin repayment until May 2021 but the fact that the alarm is being raised now shows how seriously the threat of mass default is being taken.

 

HMRC are writing to companies right now to warn them that they will be investigating any actual or suspected inaccuracies in their claims with the main focus being claims for ineligible employees and the wrong calculation or reference figures being used to determine furlough pay rates.   

 

Eamonn Wall, Managing Director of Robson Scott Associates, says there are some measures companies should take to help their case if they receive an HMRC letter. 

 

“They should find and retain copies of any written confirmations they gave to employees notifying them that they’d be placed on the furlough scheme along with copies of any calculations used as the basis for any claims made.

 

“It would also be helpful if they had any proof or evidence of regular working hours for these employees and/or to prove that the furlough working ban had been strictly adhered to.”

 

“HMRC can seem relentless when it comes to outstanding debt recovery but they can also be reasonable when it comes to finding a repayment solution or other alternative arrangements that we could help broker.”

 

While England resumes a second national lockdown and Wales emerges from its own two-week “firebreak”, some businesses might be worried about what the immediate future holds for them, especially if they’ve already received some government help already earlier in the year.

 

Others might be looking at their financial and trading positions and struggling to see a way forward even if the lockdown does lift in December and a real Christmas trading period can actually happen.

 

We can help. 

 

We’ve helped hundreds of businesses negotiate and work with HMRC to settle any outstanding debts and continue to trade profitably even while paying down large owed amounts. 

 

Contact us today to arrange a free professional consultation for your company and together we can plot a realistic plan to satisfy any creditors and give you confidence that you can recover.