2021 is expected to show a huge increase in fraudulent offences, a sad knock-on effect of the pandemic. This is not only being committed by organised crime gangs but by seemingly legitimate companies.
The UK government has seen a further increase in business fraud, especially with the introduction of the job retention scheme (JRS), furlough scheme and the scheme for the self-employed income support scheme (SEISS).
In September last year, HMRC stated that an estimated £3.5 billion – with the number ever-increasing – may have been fraudulently claimed or paid out in error. The true cost of this activity will not be known until at least the end of 2021.
Investigations have revealed the extent of fraudulent claims from employers such as companies that claimed on behalf of staff that no longer worked for the company. These included those on maternity leave or in receipt of statutory sick payments. The remittances were not passed on to staff as they continued to work, not knowing that their employer had submitted JRS claims for them.
HMRC has come under criticism for not publishing a list of employers who have claimed JRS. Pressure has been mounting from both employees and the press to name and shame companies. This would help to prevent any further cases of false claims.
HMRC are in the process of investigating high-risk cases and will no doubt carry on with their investigation into many known fraudulent activities. It is stated in the guidelines that investigations may take place within 5 years of the scheme or 20 years if fraud is suspected.
In September 2020, HMRC reported that they had 27000 high-risk cases. Investigations into 11,000 of one-to-one cases started in October 2020. So far, three arrests have been made. As more inquiries take place there will be further penalties and convictions made.
Potentially, more fraud cases will occur as a result of the JRS being extended until the end of April 2021. Although the scheme has been widely supported it has, unfortunately, been abused by some companies.
If you know of or suspect potential fraudulent cases, they can be reported to the HMRC on 0800 788 887 or via the online portal www.tax.service.gov.uk HMRC Fraud Hotline -Information report form.