Covid-19 Investigations

It is still too early in the pandemic to know exactly how much the total cost of the aid provided to individuals and businesses in the UK, but it will likely be more than £300bn just for the financial year from April 2020 to April 2021, according to the Office for Budget Responsibility (OBR).

How can the government hope to cover the cost of this financial aid? The most obvious way is to ensure that those who claim the assistance are indeed entitled to receive the amounts that they have claimed. This means opening enquiries and investigations into the claims that are made and hitting any who abuse the aid with severe financial penalties.

BBC News recently reported that HMRC have made what is thought to be the first arrest while investigating fraudulent claims. A man was arrested on suspicion of defrauding the government's furlough scheme out of £495,000 and a spokesman from HMRC stated that "we will not hesitate to act on reports of abuse of the scheme".

As of May 2020 HMRC said that they are conducting over 1,000 investigations into abuse relating to potential misuse of the scheme. Employers are being told to keep records for five years, so it is clear that HMRC may decide to open enquiries at a later date if they feel that there is a case where assistance was claimed fraudulently.

HMRC have also recently updated their "whistle-blower" web page to include requests for information on anyone who is committing fraud in relation to the HMRC-administered coronavirus relief schemes, which are the:

• Job Retention Scheme
• Self-Employment Income Support Scheme
• Statutory Sick Pay support for employers

As discontent spreads through the UK from job losses, redundancies and failed businesses, it is natural to assume that many will use this facility to inform HMRC of the people and businesses that they suspect have committed such fraud. This will inevitably mean that HMRC will increase the number of investigations that they open where they suspect that fraud has taken place.

HMRC will expect that as a minimum all fraudulent claims are repaid and it is highly likely that severe penalties will be charged and there is the potential that HMRC will extend their investigations into further areas, potentially through criminal proceedings.

Our experts number industry award-winners for the way in which they handle investigations, making The Tax Faculty the best place for pragmatic advice. All initial consultations are free of charge as we know how confusing and complex HMRC investigations can be, therefore we want to be sure that we are best placed to assist before you commit to our services.