During the Covid pandemic the UK Government instigated a number of emergency support measures including the following Coronavirus Support Payments administered by HMRC:

• the Coronavirus Job Retention Scheme (“CJRS”) – which quickly became known as “furloughing”;
• the Self-Employment Income Support Scheme (“SEISS”);
• Eat Out to Help Out.

By HMRC’s own estimates, those three schemes were subject to substantial fraud and error – believed to total c. £6bn in total and c. 8.7%, 2.5% and 8.5% of all claims respectively.

In consequence, HMRC has now created a dedicated Taxpayer Protection Taskforce of c. 1,265 staff to conduct at least 30,000 investigations over a three-year period.

To the extent that frauds or errors are suspected to have occurred, HMRC will normally investigate them as civil matters using the substantial powers at their disposal and – further to new provisions in the Finance Act 2020 – will recover any over-payments taxable at 100% and subject to potential penalties of up to 100% and to late payment interest. However, in some cases, HMRC will embark upon criminal investigations with a view to criminal prosecution and potential prison sentences.  Indeed, HMRC made its first arrest in July 2020.

In the case of CJRS / Furlough fraud, three main types of fraud were quickly identified by HMRC:

• furloughing staff whilst asking them to continue to work from home or “volunteer” unpaid;
• furloughing staff without changing their working conditions or telling them;
• claiming furlough money for “ghost” employees – who they no longer had or had never employed.

SEISS and Eat Out to Help Out frauds have involved understating self-employment income or overstating qualifying till receipts respectively.

Of course, there was a lot of confusion about the terms of the schemes – particularly initially – and HMRC are mindful that many unintentional errors were also made.

Regardless of how the errors occurred, there is huge scope to mitigate the penalty position and minimise the risk of criminal prosecution by approaching HMRC to pre-empt an enquiry by making a full voluntary disclosure.

We assist businesses and individuals who come under civil investigation by HMRC in connection with Coronavirus Support Payments or who wish to make full voluntary disclosures of any errors that might have occurred.