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Abuse of the furlough and bounce-back loan schemes has been widely reported with the National Audit Office (NAO) estimating that it will take months to identify potential fraud and mistaken claims. In response, the UK Treasury is launching a Taxpayer Protection Taskforce to address fraudulent or mistaken claims across the full range of taxpayer-funded COVID-19 support schemes.

At Lewis Nedas Law, we are starting to see more & more HMRC compliance checks with an expectation of both civil and criminal investigations being undertaken with increasing force.

As a business, it is important to understand that even claims made in good faith may still face investigation if errors were made during the application process.

If you require help & advice with HMRC fraud investigations or compliance checks related to any of the COVID support schemes, please get in touch today. Call us on 020 7387 2032 or contact us online.

Bounce Back Loan Scheme Fraud

The Bounce Back Loan Scheme (BBLS) allows businesses to borrow between £2,000 and up to 25% of their turnover. The maximum loan available is £50,000. The scheme is currently open to applications until 31 March 2021.

Checks on eligibility related to the scheme are light and this has made the application process more open to fraud. There have been genuine concerns that criminals may have been able to infiltrate a legitimate business and then engineer fraudulent applications that directors of the business are unaware of.

Criminal Offences Related to Bounce Back Load Fraud

There are several serious offences related to bounce back load fraud and these include:

  • False accounting
  • Fraud by false representation (Fraud Act 2006)
  • Conspiracy to defraud
  • Money laundering

If there is any doubt or suspicion around applications made to the loan scheme by your business, it is important that this be investigated immediately. Furthermore, if there is potential fraud uncovered, the company directors should instruct legal council and get further assistance from expert criminal fraud lawyers.

Furlough Scheme Fraud / CJRS Fraud

The Coronavirus Job Retention Scheme (CJRS) more commonly known as the ‘furlough’ scheme was launched in March 2020. The scheme allowed companies to claim a % of an employee’s wages to keep them employed and on the payroll.

HMRC have already identified thousands of fraudulent claims worth billions of pounds. As mentioned, this is an area of active investigation for HMRC and businesses need to be aware of what types of activity would be considered fraudulent.

Examples of Furlough Fraud

Examples of furlough fraud can include:

  • Furloughed staff are asked to continue working from home
  • Staff have been furloughed but have not been notified
  • Claims have been made for employees that no longer work for the business
  • Back dating claims

Criminal Offences Related to Furlough Fraud

There are several serious offences related to furlough fraud and these include:

  • False accounting
  • Fraud by false representation (Fraud Act 2006)
  • Conspiracy to defraud
  • Money laundering

In addition, the HRMC can also use its’ investigative powers to check that claims have not been overpaid and have been used correctly.

Furlough Fraud: What Can Businesses Do?

The HMRC is focused on deliberate fraud and in serious cases may proceed with a full criminal investigation. When a business is concerned around furlough claims it is important to audit furlough activity and to get external advice where necessary.

Where a business is contacted by HMRC regarding furlough fraud it is imperative to get expert legal advice immediately and get further assistance.        

If you require help & advice with HMRC fraud investigations related to furlough fraud or bounce back loans, please get in touch today. Call us on 020 7387 2032 or contact us online.

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