During the COVID-19 Pandemic, the UK Government introduced many schemes to help people and businesses weather the storm caused by the lockdown restrictions.
An unpleasant side effect of this government support has been considerably more opportunities for fraudsters to effectively steal from taxpayers. In order to uncover the perpetrators, the UK Treasury has launched some 23,000 enquiries into potentially fraudulent claims made during the pandemic.
Similarly, HMRC announced that they were investigating 27,000 cases of potentially fraudulent use of the Coronavirus Job Retention Scheme (commonly known as furlough).
Suspected abuse of the furlough scheme
A whopping £70 billion has been distributed via the furlough scheme and HMRC has estimated that a shocking 5-10 % of furlough payments were claimed fraudulently.
The National Audit Office reported that 9% of furloughed workers admitted working for their employer while on furlough. HMRC has confirmed that, before the end of March 2021, it opened more than 12,000 investigations into fraud and error relating to furlough, as well as the Self-Employment Income Support Scheme and the Eat Out to Help Out Scheme.
Examples of possible fraud
There have been a series of arrests in relation to bounce back loans taken under false pretenses. The National Crime Agency (“NCA”) recently arrested three men who worked for a financial institution in London under suspicion of using their “specialist knowledge” to fraudulently misappropriate around £6m.
Furthermore, the Financial Times disclosed concerns regarding a “group of companies set up by an obscure entrepreneur [which] received as much as £40m in furlough cash in a single month this year, despite little public evidence that the businesses have any staff.” The Financial Times went on to discuss how the companies in question are believed to have availed of between £20 million and £40 million of public money in May 2021, despite having only been registered to a virtual mailbox service in London.
What is being done to combat fraud?
Due to the massive concerns regarding the misuse of public funds allocated to relieve the pressure of the pandemic, Chancellor Rishi Sunak announced that £100m will be put towards a Taxpayer Protection Taskforce. This will involve 1,265 staff working within HMRC to detect fraud.
Despite the misuse, the government have no regrets about rushing through the economic support schemes, even though the House of Commons Public Accounts Committee warned that there was ample potential for fraud against taxpayers.
The true scale of fraud committed during the pandemic is yet to be known. It may take many years for fraudsters to be caught, and those who wrongly claimed or overclaimed, and for individuals and companies to uncover frauds carried out against them and take legal action.
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