Furlough & Fraud Investigations: HMRC’s taskforce continues to claw back money wrongly claimed from the furlough scheme

Having been interviewed about how the Government is working to reduce the amount of public money lost to fraudulent claims for COVID-19 government support packages, Rishi Sunak has stated that the amount of money lost to fraud on the furlough scheme and company bounce back loans has reduced by a third due to the investigations pursued by HMRC’s taskforce.

Despite the furlough scheme ending in September 2021, the scheme still regularly makes headlines due to HMRC’s investigations into fraudulent claims and the penalties that often follow. In March 2021 the Government announced a HMRC Taxpayer Protection Taskforce to investigate fraud in relation to COVID-19 government support packages.

Back in 2020 HMRC had estimated that £5.8bn was lost to error and fraud from the Coronavirus Job Retention Scheme (commonly known as the furlough scheme) and the Self-Employment Income Support Scheme (SEISS), whereas HMRC’s latest figures estimate that the total value of error and fraud across these schemes is now £4.6bn. This reduction is put down to the investigations carried out by HMRC’s taskforce.

HMRC investigations into a business’ use of the furlough and SEISS scheme can be civil or criminal. The investigations can range from requesting business records/ documents, holding interviews with directors and employees, and conducting searches at business premises. A civil investigation could require a business to repay the amount claimed fraudulently or in error and result in penalties of up to 100% of the amount falsely claimed. Criminal investigations pose the same risks, as well as the risk that company directors, shareholders and senior individuals could be imprisoned for their fraud.

Businesses also face the reputational implications of being investigated and convicted of fraud. Not only are the press likely to take an interest in this type of tax fraud, but HMRC continue to name individuals and businesses in their online list of deliberate tax defaulters. This reputational damage can have serious implications for many businesses.

If your business is the subject of a HMRC investigation or you are concerned that your business may be investigated, we urge you to take expert legal advice from our tax investigation team before responding to HMRC. Whilst we can (and do) advise clients who seek our advice at the conclusion of HMRC’s investigation when a substantial penalty has been issued, it is always more beneficial to seek expert legal advice at the outset of a HMRC investigation so that we can advise you through the investigation and minimise the company’s and individual’s liability so far as is possible.

Unlike accountants and HR advisors our advice can be given under legal professional privilege (that is, communications between lawyers and their clients made for the purpose of seeking or giving legal advice remain confidential). This can be critical.

Kuits is recognised by Legal 500 as one of the leading tax investigations law firms in the country and is experienced in advising individuals and companies faced with serious fraud enquiries by HMRC. To speak to an advisor under the complete confidentiality of legal professional privilege, call 0161 838 7867 or email robertlevy@kuits.com.