At the beginning of March, Chancellor, Rishi Sunak announced in his Spring Budget that £100 million is to be set aside to form a Taxpayer Protection Taskforce. A team of 1,250 HMRC officials will be responsible for investigating and prosecuting those who have unlawfully acquired money under the various Government schemes designed to help businesses get through the pandemic.
The Taskforce will focus on schemes such as the Job Retention Scheme (the Furlough Scheme), the Self Employment Income Support Scheme and the Bounce Back Loan Scheme, amongst others.
In announcing the launch of the Taxpayer Protection Taskforce, Mr Sunak said:
“Our coronavirus support schemes have helped millions of honest, hard-working people – but a small minority have seen this pandemic as an opportunity to defraud the taxpayer.
“This will not be tolerated, which is why the new taskforce will crack down on this criminal activity.”
How will the Taxpayer Protection Taskforce investigate fraud?
The new Taskforce will sit alongside other measures to tackle fraudulent activity including a campaign to highlight enforcement endeavours in order to deter criminal behaviour.
Along with examining claims from whistleblowers, officials will sift through PAYE records, tax returns, and other relevant documents to discover if taxpayer money was claimed unlawfully.
To catch those who have fraudulently utilised the Bounce Back Loan Scheme, the Government will build on guidance issued to lenders. This guidance has already prevented over 42,000 fraudulent loans from being issued.
Is Covid-related fraud a serious problem?
Fraud related to the Furlough Scheme has been well publicised. In September 2020, a company director and an accountant were arrested over a suspected £70,000 fraud involving the Coronavirus Furlough Scheme. Furthermore, it is believed criminal gangs have collected over £2 billion as a result of furlough fraud.
A report aptly named Daylight Robbery produced by Policy Exchange estimated that fraud and error during the coronavirus crisis will cost the Government in the region of £4.6 billion.
In a foreword to the Report, former Home Secretary, The Rt. Hon. Lord Blunkett said:
“With a further range of substantial recovery measures announced by the Chancellor of the Exchequer on 8 July, more opportunity exists for those willing to defraud the nation as well as services and individuals, and further steps need to be taken urgently to coordinate across departments and agencies, concentrating on those areas where verification is most difficult to achieve and where self-certification opens opportunity for organised criminal behaviour.”
The Report discussed, amongst other things, the circumstances behind why the Coronavirus relief measures created an opportunity for large scale fraud:
“There are a number of elements of the COVID-19 crisis that make the Government response particularly vulnerable to fraud. The first is the novelty and speed with which new measures have had to be introduced. Businesses had just days to prepare for emergency (‘lockdown’) measures and enforced social distancing, so the Government had to rapidly design and roll out new assistance schemes in order to prevent financial distress. The speed with which the Government made aid available to businesses and individuals provided opportunities for fraudsters to take advantage of the situation. The sheer size of the Government relief package also acted as a magnet for fraudsters.”
What should professionals do if they are being investigated by the Taxpayer Protection Taskforce in connection with Covid fraud?
Professionals such as Architects, Surveyors, Legal Executives, Solicitors, and others who deal with client monies can inadvertently get entangled in fraud. Furthermore, because the Government schemes designed to help struggling businesses were swiftly set up with little guidance, many employers have mistakenly claimed for funds they were not entitled to.
If you are contacted by HMRC concerning wrongful furlough or bounce back loan payments, you need to speak to a solicitor experienced in regulatory investigations immediately. They will ensure that your best interests are protected; for example, making sure that legal professional privilege and litigation privilege applies when necessary and advise you if you are asked to attend an interview under caution.
We have been helping solicitors and other legal professionals with disciplinary and regulatory advice for 25 years. If you have any questions relating to an investigation by your Regulator and/or an appearance before a Disciplinary Tribunal, please call us on 0151 909 2380 or complete our Free Online Enquiry.