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Facing an investigation for Covid-related business fraud?

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In response to the coronavirus pandemic, the Government made an unprecedented financial support package available for struggling businesses. Millions of enterprises took advantage of the help on offer, but because of the speed with which the various schemes were launched there is now concern that some ineligible recipients have obtained funds to which they were not properly entitled.

There have also been some highly publicised incidents of fraud uncovered, together with apparent attempts to avoid repayment obligations, which have fuelled a growing sense of anger among taxpayers and ministers.

As a result of this, an increasing number of business owners and company directors are now being investigated for the Covid support schemes they have accessed in the past few years. Where any type of wrongdoing is found, demands are being made for incorrectly obtained monies to be repaid, and in those cases where deliberate wrongdoing is uncovered we are also seeing criminal prosecutions commenced and directors’ disqualification orders issued where appropriate.

Our advice

If you find yourself coming under scrutiny for potential Covid fraud, then we would urge you to contact us immediately. We can confirm your entitlement to claim any funding that you have received, and will advise you on your options where you have either inadvertently or deliberately obtained monies to which you were not entitled.

Potentially problematic actions

Any proposed investigation by HMRC, the police or the Insolvency Service should be a cause for concern and you should seek advice immediately. Investigating authorities are on the lookout for companies which have:

  • made a claim under the furlough scheme for workers who were not actually furloughed or who continued to do work during the period that the company was in receipt of payments, even on an ad hoc basis;
  • made a claim under the Eat Out to Help Out Scheme for a higher number of meals than were actually served or delivered while the scheme was in operation;
  • obtained a loan which was transferred into a director’s personal account and used to fund purchases or luxuries unconnected to the company’s business;
  • made a claim under any Covid scheme for a business which did not actually exist at the relevant time; or
  • recently closed a company down that had received Covid support, or a bounce back loan, and part of the reason for the closure was (or could be interpreted as being) to try to avoid having to meet repayment obligations.

Fraud checks

Given that even conservative estimates put the cost of Covid-related fraud at tens of billions of pounds, the Government has launched a series of initiatives aimed at identifying fraudulent applications and recouping any payments wrongfully made.

This is why burying your head in the sand about the possibility of any slipups you may have made being uncovered is not a sensible option.

Recent schemes announced include the launch of:

  • the Taxpayer Protection Taskforce, which is staffed by over 1,200 HMRC employees and whose function is to specifically identify and address Covid-fraud;
  • a telephone hotline, which can be used by employees, members of the public and indeed anyone else to provide tip-offs on potentially fraudulent behaviour; and 
  • the Public Sector Fraud Authority, which will operate a watchlist of individuals and companies suspected of Covid fraud and who may be linked to organised crime.

Innocent mistakes

Finding a way through the pandemic was hard for everyone, and in some cases it is likely that genuine errors were made in deciding which schemes a business may have been entitled to apply for, and the way in which an application was put together.

In this situation, you can use the HMRC disclosure facility to report any mistakes and to arrange for voluntary repayment. To do this, you should visit the HMRC website and follow the instructions for the scheme in respect of which the mistake has been made.

For example, if you need to repay monies received under the Coronavirus Job Retention Scheme then you must complete an online form, get a payment reference number and ensure you pay back what you owe within the following 30 days.

How we can help

Where you have concerns about the financial support you have accessed during the pandemic, we can work alongside you and your accountant (if you have one) to figure out what you were entitled to apply for and how much you should have received.

Where any potential problems exist, we can ensure that these are identified early and that a deal is negotiated with HMRC to enable any wrongly obtained monies to be repaid without further sanction if this is feasible.

Where deliberate fraud is suspected, we can ensure that you receive appropriate legal advice.  We will support you with any correspondence or meetings requested by the police, or indeed the Insolvency Service where, for example, as a result of Covid support being withdrawn, your business has entered into liquidation and you are being pursued to personally cover any debts owed or threatened with director disqualification proceedings.

We can assist with problems arising out of the Furlough Scheme, the Self-Employed Income Support Scheme, the Eat Out to Help Out Scheme or a Bounce Back Loan.

Further information

To find out more, please contact a member of our Dispute Resolution team on 01904 624185.

This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.