A number of companies that made claims under the Coronavirus Job Retention Scheme will be investigated by HM Revenue & Customs.
HMRC is currently targeting employers who have either inadvertently or fraudulently claimed too much or wrongly through the Coronavirus Job Retention Scheme.
Measures include a £100m investment in a specialist taskforce to tackle fraud across all Covid-19 support packages, as announced by the chancellor in the Budget last week.
In addition, there will also be a further expansion in the recruitment of fraud investigators to increase the ability of HMRC to target non-compliance through illicit financial flows.
The Taxpayer Protection Taskforce will receive 1,265 HMRC staff to combat fraud within Covid-19 support packages, including furlough and self-employment support scheme, representing one of the largest responses to a fraud risk by HMRC.
John Dobson, CEO at AML specialists SmartSearch, said: “More than 1,000 new investigators may go some way to recouping the billions of pounds which have been lost to fraud over the past 12 months of the coronavirus crisis.
“There’s no doubt that extra resources are much in need, particularly as the chancellor has also announced a new Restart fund for businesses to replace the Bounce Back loans, which was wide open to fraud.”
The last time HMRC put 1,000 staff into criminal enforcement was a decade ago and that generated a fivefold increase in prosecutions in under five years, according to Andrew Sackey, a tax fraud expert at Pinsent Masons, the law firm behind Out-Law and former head of HMRC’s offshore, corporate and wealthy compliance unit.
He said: “The creation of this massive Covid fraud taskforce is a marked shift away from previous more conciliatory lines in HMRC nudge letters which urged firms and individuals to come forward voluntarily, acknowledging that ‘mistakes happen’.
“It is a clear message that the government is dedicated to ensuring the hundreds of billions of pounds it has spent on Covid support does not end up in the hands of fraudsters.
“It is more important than ever that employers undertake reasonable due diligence to ensure that they and their staff have complied with the rules of the furlough scheme. Even if head office thinks the rules have been complied with, what has actually happened on the ground may be very different.
“Those who find themselves in breach of the rules, for whatever reason, should seek expert advice about how best to put the record straight and repay sums they were not entitled to as soon as possible.”
A wide range of measures are likely to be deployed to ensure that the right taxpayers pay the right amount of tax at the right time, Sackey said, but this new task force will be looking to specifically address the more serious abuses of the ongoing Covid relief schemes.
Sackey continued: “Where HMRC uncovers deliberate action, one of the factors which leads to HMRC taking criminal, rather than civil, action is where a deterrent is needed.
“In the current climate, it is likely that the government will want to see HMRC using its criminal powers as a deterrent to systematic abuses of Covid schemes.”