When the Government’s Covid-support schemes were put in place, the priority was to get money to those in need (the workers, the self-employed and hospitality venues) as urgently as possible. The Government and HMRC knew that there would be time later to review claims and recoup money lost through fraud, and that time has now come.
Here, we consider how HMRC is approaching the task, the types of fraudulent claim it expects to uncover, and how you should respond if you or your business receive a notification of investigation. For personalised advice, contact us today.
Why is HMRC looking to recoup funds lost to Covid fraud?
The cost to the UK of supporting its businesses through Covid-19 is estimated to have been around £150 billion. The enormity of the costs has made it a priority to restore misdirected funds to the Treasury.
Of the total amount spent, HMRC has assumed more than 8% of Coronavirus Job Retention Scheme (CJRS) and Eat Out to Help Out (EOHO) claims were mistaken or fraudulent, along with around 2.5% of Self-Employed Income Support Scheme (SEISS) claims. Whilst the proportion may seem relatively small, the impact on public funds is significant - around £5.5 billion.
How HMRC plans to catch fraudsters
In November 2021, HMRC had already launched more than 26,500 investigations into possibly fraudulent support claims. Given that they had initially planned to target around 30,000 cases in a three-year period, it is clear to see that HMRC is cracking down on Covid fraud more rigorously than even it expected to.
Accordingly, the tax authority has been given an additional £100 million in funding to form a Taxpayer Protection Taskforce. The 1265 member team is expected to recover roughly £1 billion from incorrect or fraudulent claims.
As well as investigating reported cases, HMRC will be conducting random audits to gain a better understanding of the risk of fraud and error across the full body of claimants.
Who are the perpetrators?
In some cases, organised crime groups have been involved in defrauding the scheme. Others have acted with criminal intent, including business owners who thought a false claim might go unnoticed. For instance, one of the most common deceptions used by business owners was to claim CJRS grants whilst allegedly furloughed employees continued to work.
Still, in cases where claims were made through genuine error or arose through negligence, carelessness or haste, HMRC is unlikely to consider these to be sufficient defences. Businesses have already been given a 90-day grace period in which to review their claims and notify HMRC of any overpaid grants, and larger claimants in particular have been encouraged to self-review.
Likewise, company directors who were unaware of fraud being perpetrated within their organisation may not escape retribution. New legislation ensures directors can be held culpable where corporate criminal offences have taken place, under which they will be accountable for any failure to prevent dishonest behaviour in respect of Covid-support schemes.
How to respond if you receive a notification of investigation
If HMRC notifies you that it is looking into your claim, you should seek professional support urgently. Legal advisers who are well-versed in HMRC investigations can help you to gather the evidence necessary to satisfy HMRC, however intense their scrutiny.
In cases where transgressions are uncovered, the right team can assist in mitigating the consequences of an investigation by demonstrating a comprehensive understanding of the circumstances, giving a genuine account of the reasons behind the claim and establishing that overpayments were not as significant as suggested. Central to doing so will be a forensic analysis of company documents, data and systems, during which it is vital to recognise every item of evidence that supports your defence.
Contact our Covid-19 Fraud Defence Solicitors in Central London Today
Lewis Nedas Law’s extensive experience in handling HMRC investigations and defending related prosecutions means we are ideally placed to support you with any concerns you have relating to your Covid-support claims. If you have been notified of an investigation into your claim, or you are worried that you might be, our knowledgeable solicitors are on hand to advise and represent you.
For more information or to discuss your position with our team, please contact us on 020 7387 2032 for legal support 24/7, or complete our online enquiry form.
