Over £5.5 billion of Covid-support funds have been lost to fraud and error, but how did this happen and what are the authoritative bodies doing to tackle the problem? In this article, we look at fraud and error in the context of Covid-19, including what you should do if you are concerned about a claim for any of the Coronavirus-related support schemes. For personalised advice, please get in touch now.
What is fraud and error, and how is it measured?
Fraud and error occurs when those who may be entitled to benefits, government support payments, or loans are overpaid. The UK government sets out three categories of fraud and error as follows:
- Claimant error: When a person mistakenly puts the wrong information as part of a claim
- Claimant fraud: When a person deliberately includes false information, or withholds information as part of a claim
- Official error: When departmental staff make errors when processing an award or there is a delay in processing information
There has been a substantial rise in fraud and error as a result of the pandemic in all three categories, and HMRC are now determined to recover as much of the lost funds as possible.
Methodology
The government measures fraud and error in three stages - the initial planning assumptions, provisional estimates and full estimates. With provisional estimates published at the beginning of November 2021, the government is now in the final stage of undertaking complex analysis to understand the full extent of fraud and error with Covid-support schemes. For example, random enquiry programmes are being conducted alongside risk-based compliance interventions for the Coronavirus Job Retention Scheme (CJRS), with full estimates expected to be released in 2022.
Why has the pandemic made fraud and error more likely?
Coronavirus-support schemes were created to help those in need as quickly as possible, however this means that they may not have been examined for fraud vulnerability as effectively as other social support schemes. While HMRC has set out the checks that were in place to prevent fraud, (such as ensuring claims were processed through the HMRC portal as far as possible), there has not been much time to refine the process. Of course, this is also the first time many have had to process these types of claims and, as a result, high levels of error are to be expected.
Covid-support schemes vulnerable to fraud and error
There are several Covid-support schemes vulnerable to fraud and error which HMRC and the Department for Work and Pensions (DWP) are examining. These include:
- Coronavirus Job Retention Scheme (CJRS)
- Bounce Back Loan Scheme (BBLS)
- Self-Employment Income Support Scheme (SEISS)
- Eat Out to Help Out (EOTHO)
‘Opportunistic fraud’ thought to be most likely
The latest estimates for the amount of funding lost to fraud and error in these schemes in 2020 to 2021 are 8.7% (CJRS), 8.5% (EOTHO), and 2.5% (SEISS).
The government further categorised these estimates into organised crime, opportunistic fraud, and error (made by HMRC and/or the claimant in the claimant’s or HMRC’s favour) to help define the specific risks with each scheme. While the assessment points towards opportunistic fraud as the most likely risk for CJRS, SEISS and EOTHO, it is said to be ‘particularly uncertain’ what the true figures are for the furlough scheme. This is because some employers who claimed CJRS will have been driven by fraud and others by error.
How are HMRC tackling fraud and error?
The government has invested more than £100 million in a new Taxpayer Protection Taskforce. Launched in March 2021, the taskforce will tackle and investigate fraudulent claims across all of the Coronavirus-support schemes. The funding was used to employ over 1,250 people who are currently responsible for examining compliance activity over the next two years, with HMRC committed to conducting 30,000 reviews during this period.
HMRC had already received 28,444 reports of potential fraud in relation to the furlough scheme by June 2021. There are currently around 10,000 cases open and HMRC are working with claimants who will be asked to supply additional evidence. HMRC will also be undertaking random audits to provide a full understanding of fraud and error risk across all the entire body of claimants.
What to do if you have been accused of Covid-related fraud
If you have been accused of Covid-related fraud, it is essential to instruct a specialist solicitor as early as possible. Even in cases where you suspect you are being investigated in relation to any of the support schemes listed above, you should discuss your specific situation with a lawyer in strictest confidence. This is a fast moving area of law that is growing increasingly important for individuals and businesses. For proactive advice and representation, contact our team.
Contact our Covid-19 Fraud Defence Solicitors in Central London
At Lewis Nedas Law, we have a long history of dealing with HMRC and defending prosecutions brought by them. From our offices, we represent and advise individuals and businesses in Central London, West London, North London and across the UK. For further information or to speak to our solicitors, please contact us on 020 7387 2032 for 24/7 legal support, or complete our online enquiry form.
