The UK tax authority has opened almost 13,000 probes into businesses that may have abused the government’s coronavirus business support schemes.
HM Revenue & Customs (HMRC) is investigating potential fraud and other non-compliance with the rules for the use of the government’s furlough programme, self employment income support scheme, and the “eat out to help out” scheme.
UK law firm BLM uncovered the investigations data as part of a freedom of information request. It found that HMRC opened 12,828 probes up to the end of March, with the largest proportion (7384) relating to the use of the government furlough scheme.
The tax body had also launched 5,020 investigations into the self-employed income support scheme and 424 into the “eat out to help out” scheme, as of the end of March this year.
HMRC has opened the probes in order to protect or recover funds that were lost to fraud, tax avoidance and evasion and other breaches of the rules.
A spokesperson for HMRC said: “It is vital we support businesses to recover by ensuring a level playing field so the majority are not undercut by the few who tried to cheat the system.
“We are taking tough action to tackle fraudulent behaviour. We have now opened more than 12,000 inquiries into claimants we suspect may have kept more than they were entitled to. We have also begun a handful of criminal investigations.”
It comes after Rishi Sunak announced the Treasury would invest £100m into a specialist taskforce to tackle fraud across all Covid-19 support packages in the March budget.
As part of the freedom of information request, the tax authority revealed that so far five individuals have been arrested in relation to the coronavirus job retention scheme (CJRS) and three in relation to “eat out to help out”. HMRC was unable to confirm the current number of prosecutions relating to the schemes.
Separately, the National Crime Agency (NCA) arrested three city workers in January as part of an investigation into fraudulent coronavirus bounce-back loans totalling £6m.
More than 1m UK businesses have used the furlough scheme during the pandemic, and a cumulative total of 11.5m jobs have been supported by the Coronavirus Job Retention Scheme, according to the latest government estimates.
Iskander Fernandez, partner and specialist white collar crime and investigations lawyer at BLM, said the government could be looking at “losses in the billions through fraudulent activity.”
“As it takes time for HMRC to build a case, it’s unlikely that we’ll see an immediate wave of arrests and prosecutions. However, it’s a case of when, rather than if, given that thousands of interventions are currently underway,” he added.