As part of the Government’s attempts to keep the economy afloat during the pandemic, they handed out almost two-hundred billion pounds in 18 months as part of various COVID-19 related support schemes.
Due to the urgency of the situation at the time, a significant amount of money was handed out without any meaningful background checks. This may come as no surprise considering that support schemes such as the Coronavirus Job Retention Scheme (CJRS), Self-Employment Income Support Scheme (SEISS), Eat Out to Help Out and Bounce Back Loan Scheme (BBLS), were up and running within a few weeks and money given out just days from initial claim.
However, there is uncertainty about how much of this money was wrongfully or fraudulently claimed with estimates ranging from 5% to 20%. Even at the lower end of these projections, that would translate into around £10 billion “leaking” from the system in a very short period.
Last year, the Treasury provided HMRC with over £100m to create a Taxpayer Protection Taskforce. This unit, staffed with over 1,200 trained investigators is on the hunt for COVID-19 fraudsters and has the power to prosecute the worst offenders.
The taskforce will be working with other agencies such as The Insolvency Service and Companies House to improve its operational effectiveness and this collaboration is already proving successful.
Recently, a restaurant owner has been disqualified for seven years after abusing the Eat Out to Help Out and CJRS by wrongly claiming more than £50,000 in support.
In another case, a director was banned for 12 years after fraudulently claiming £50,000 through the BBLS before transferring the full amount to himself days before his company went into administration.
Finally, one Glasgow-based company even secured two Coronavirus Business Interruption Loans totalling £240,000 based on entirely false information.
Although the Insolvency Service will often initiate an investigation if a company has gone into liquidation, HMRC have the power to “piggyback” the enquiry and criminally prosecute those involved if tax fraud is suspected. If it can be proved that a wrongful claim was deliberate, the agencies also have the power to pursue directors themselves, even if the company has already gone into liquidation.
It is often the case that those who have made false claims for COVID-19 support, or committed tax fraud, regret their actions later.
In the UK, anyone who admits to tax fraud (including COVID-19 related tax fraud), and makes a voluntary disclosure to HMRC, can guarantee that criminal action will not be undertaken. Of course, the money must be paid back, or tax paid on any sums not returned, but that is much more preferable to having sleepless nights or worrying about who may knock at the door early one morning.
Such approaches to HMRC, or any other government agency, must be handled carefully. At Lubbock Fine have experienced tax experts able to negotiate on your behalf and lead you through the process.
If you would like to have a confidential discussion about contacting HMRC, please contact Graham Caddock (firstname.lastname@example.org), Director of Tax Risk Management and Investigations or your usual Lubbock Fine contact.