Ministers have warned that the COVID-19 support schemes have cost taxpayers more than £30bn to date with many more billions expected to be lost.
COVID-19 Fraud | Rosenblatt’s Financial Crime Team
It is believed that up to £27bn which was paid by the Government through the Bounce Back Loan Scheme (BBLS) will not be repaid because many businesses went bankrupt or cheated in their applications. Many individuals provided fake tax returns and bank accounts for non-existent businesses to secure these loans. In one incident, an individual took out a bounce bank loan in the name of a luxury car dealership in an attempt to buy a £41,000 Porsche from the same firm. Many critics of the BBLS state the Government’s promise to underwrite loans from the banks was the scheme’s biggest flaw, incentivising the lenders to make minimal checks as they would not lose out if the money was not repaid. We have considered the BBLS in further detail in our earlier article.
In addition, blunders and over-claiming of Universal Credit payments rose to an all-time high of £5.5bn over the last year up to March 2021.
The Commons Public Accounts Committee fears vast sums have gone missing over the past year from funds that were designated to protect those businesses and individuals hit by the pandemic. Councils are responsible for delivering many of these COVID-19 support schemes, but the Committee stated there was ‘worrying evidence’ of their inability to investigate the potential misuse of the money received.
This COVID-19 deficit is in addition to the £51.8bn in public money that the Government believes is lost to fraud and error annually. This is broken down into £26.8bn which is lost through the tax and benefit system with a further £25bn lost in areas of public spending which Government is unable to specifically identify.
The Committee Chairman, Dame Meg Hillier noted earlier this month that “fraud is never acceptable and when so many were suffering as a result of Covid, the Government needs to tackle the fraudsters robustly.” She added that the “committee has long been concerned about the impact of departments’ own errors – including overpayments which need to be clawed back – which leads to further hardship for the already vulnerable.”
Accordingly, many MPs are now calling for the names of businesses that were awarded COVID-19 loans and grants to be published, demanding the Treasury to set out new transparency guidance for Government support in the next 6 months. The Committee believes this will provide whistle-blowers with the opportunity to report suspicious claims.
A spokesperson for the Committee added that the “HM Treasury and Cabinet Office should, within six months, introduce mandatory fraud-impact assessments that require formal sign-off… for all Government “major project portfolio” programmes and for all other schemes that departments identify as having a moderate to high risk of fraud or error.”
The Committee further noted that it was ‘unacceptable’ that it took the Treasury 12 months to approve £100m of funding for the HM Revenue & Custom (HMRC) Taxpayer Protection Taskforce which was not announced until March of this year. The taskforce was introduced to tackle fraud linked to COVID-19 support measures, which many believe should have been introduced sooner as the Government knew there was a heightened risk of fraud.
Janet Alexander, Director of the HMRC Taxpayer Protection Taskforce confirmed that “HMRC is measuring the level of error and fraud within the Coronavirus Job Retention Scheme, Self-Employment Income Support Scheme and Eat Out to Help Out scheme. We have already opened 12,000 inquiries into suspicious claims, and have made eight arrests with more in the pipeline.”
Ms Alexander did concede that, “we know some people will have made genuine mistakes and these people should not be worried. They just need to get in touch so we can help them rectify the issue quickly. However, HMRC will take robust action to recover money from people who have made fraudulent claims.”
Rosenblatt can help
Rosenblatt has a wealth of experience in criminal law and is uniquely placed to support client’s crime needs during these unprecedented times, consistently ensuring a familiarity with the ever-changing Government guidance on COVID-19.
https://www.rosenblatt-law.co.uk/services/financial-crime/#financial-crime
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