HMRC Covid-19 fraud investigations rise 27%
There has been a 27% rise in Covid-19 Self-Employment Income Support Scheme (SEISS) fraud cases in the last three months but no further arrests
Research collected from a Freedom of Information (FOI) request by law firm BLM found that between April and June 2021 abuse of self employment support grants accounted for the most investigations by HMRC, followed by probes into the Eat Out to Help Out Scheme (EOHO) which rose by 36% and the number of Coronavirus Job Retention Scheme (CJRS) investigations rose by 3.6%.
As of 30 June 2021, HMRC had opened nearly 15,000 investigations into potential misuse of the government’s Covid-19 support schemes, 1,367 of these were into the SEISS which brings the total number to 6,351.
According to statistics released by HMRC up until 15 August 2021, £27.1bn had been paid in SEISS grants in total and across the five grants 2.9m individuals received a grant and 9.9m total grants had been claimed.
Interventions into potential misuse of the furlough scheme are now at 7,632 since the pandemic began, with 584 launched into the Eat Out to Help Out scheme.
Since August 2020, HMRC has spent £16m on covid investigations and has redeployed 360 caseworkers, excluding the entire Covid-19 compliance taskforce, to work on investigations into fraud regarding the Covid-19 support schemes.
An HMRC spokesperson said: ‘The Covid-19 support schemes have helped millions of people and businesses through the pandemic, and the government was clear that the priority was getting money to those who need it as fast as possible.
‘The taxpayer protection taskforce is expected to recover £1bn from fraudulent or incorrect payments over the next two years, and work is already underway, with 23,000 ongoing investigations.’
Since April there have been two further arrests relating to the furlough and Eat Out to Help Out scheme bringing the total number to five for each, however, a first arrest is yet to be made in relation to SEISS.
Julian Cox, partner and head of employment, BLM, said: ‘These figures show that with the HMRC’s Covid-19 interventions in full swing, the SEISS has been a thriving ground for potential misuse of public funds.
‘Self-employed individuals and members of a partnership tend to have a less uniform structure in their business compared to larger organisations. It could well take HMRC longer to spot instances where the person in question has accessed funds fraudulently, hence why we’re seeing a sudden rise in interventions now.
‘Given the short amount of time these extensive support schemes were assembled and launched in, and the complicated processes and criteria required to access them, some individuals and businesses will have made honest mistakes in their applications. However, there’s no doubt that others will have knowingly taken advantage.
‘Though we don’t currently know how many of these interventions actually bear out, we are now seeing the first round of arrests and prosecutions commence. There’s a real risk here that the government could lose out on millions, if not billions, due to fraudulent activity, and the investigations into this.’
In response to the figures, BLM urges self-employed individuals, small business owners, and larger organisations that have accessed the support schemes to make sure that they have done so properly. The firm states that anyone caught in the midst of intervention will need to seek proper and thorough advice as it will ‘prove decisive in handling any legal action taken by HMRC’.
In September, HMRC confirmed that companies had repaid £1.3bn under the furlough scheme since July 2020, with £300m paid back over the past three months alone. The furlough scheme ended on 30 September.
The tax authority has confirmed that the taxpayer protection taskforce, which was given £100m of government funding in the Spring Budget to hire 1,265 HMRC staff to investigate Covid-19 fraud, will be in place until 2023.
Story by Ruby Flanagan of Accountancy Daily