HMRC’s fraud hotline received more than 91,000 calls during the first nine months of the pandemic, with concerns about furlough fraud likely to be behind many of the calls.
On average 10,000 calls per month were made to HMRC’s hotline from April to December 2020, according to HMRC figures, an increase of around 1,000 calls per month on the previous years’ 9,000 monthly average.
According to insurer PfP, which insures businesses and individuals against the costs of HMRC tax investigations, furlough fraud was likely to be behind many of the calls, as well as some allegations of abuse of the government’s ‘Eat Out to Help Out’ scheme, when some restaurants were accused of faking excess orders so as to claim greater amounts from the scheme.
The taxman is likely to add significant resources to investigate as many of the fraud allegations as possible, PfP said.
The insurer speculated that, as a result of financial pressure from the Covid crisis, HMRC may now look to increase the pressure on those under investigation in order to recoup as much revenue as possible, which could mean more intensive investigations and tough penalties being handed out in the coming months.
PfP managing director Kevin Igoe said many of the fraud allegations made via the hotline were likely to be fake.
“Whilst those cheating the tax system should be held to account, heightened tax investigations are the last thing that decent, law-abiding businesses need at the moment,” he said.
“Months of lockdown restrictions have already put many businesses under huge pressure. HMRC investigations can be costly, time-consuming and can cause enormous stress for the owner-managers and directors involved.”
An HMRC spokesperson said: “Since the start of the pandemic, HMRC has worked consistently to support businesses during what we know has been a uniquely challenging time for them, while continuing to tackle tax fraud and avoidance to maintain a level playing field.
“The suggestion that we are going to arbitrarily step-up investigations and pile unnecessary pressure on businesses as they seek to recover from the impact of coronavirus is completely false.”