Coronavirus business loan scheme fraud
This has largely been reported through the prism of organised crime, which is believed to be responsible for around half of the fraudulent claims. That level of criminality may be reflected on with a resigned tut, given that the scope for abuse of the scheme was clear from the outset. But, what about the other potential c. £2bn lost to fraud?
This potential loss is to improper claims, for example: businesses ‘pushing the envelope’, operating in a ‘grey area’, or taking wrong decisions for the immediate survival of the business. Behaviour of this nature often operates on a spectrum of culpability. At the lower end, there is the genuine mistake or the erroneous decision made in good faith. At the higher end, there is sharp practice and a desire to use the scheme to gain as much money as possible.
The best time to address mistakes – and mistakes of judgment – has arguably passed as HMRC’s ‘amnesty’ period ended on 20 October 2020. The focus will now be on investigating claims.
On 07 September, Jim Harra (chief executive of HMRC) gave evidence to the House of Commons Public Accounts Committee that HMRC had received 8,000 notifications from employees highlighting potential non-compliance. These may, or may not, fall part of the 27,000 ‘high-risk’ claims being looked into. Of those high-risk claims, HMRC expects that around 10,000 will be investigated.
The receipt of misappropriated funds brings with it a number of different issues for companies to manage. The most immediate concern is likely to be with the taxman and the reputational damage that may follow. However, the knottiest problem may well be how to manage potentially criminal funds which have entered, and possibly exited, a company’s accounts. All of these issues are better managed proactively.
During the ‘amnesty’, there was an amenable ear to the repayment of funds even those repaid due to mistakes – or mistakes of judgment. As it stands, HMRC may still be receptive to companies ‘correcting’ claims which have been made, but the mood is changing. The coronavirus crisis continues to put a significant strain on public resources and there is likely to be little, and reducing, sympathy for companies that have incorrectly claimed funds and have not put in place steps to undo that error.
For further information on the issues raised in this blog post, please contact a member of our criminal litigation team.
Nicola Finnerty is a Partner in the Criminal Litigation department. She has experience of fraud, corruption (including the Bribery Act) and cartel matters, financial compliance, money laundering, asset seizure and confiscation cases, through to sexual offence cases, drugs, murder and offensive weapon crimes.
Matthew Hardcastle is a Senior Associate in the Criminal Litigation department. His experience encompasses cases involving general and white collar crime. Matthew has significant experience of advising clients during interviews under caution both following an arrest and during a voluntary attendance. Matthew’s experience includes advising high profile individuals and advising in matters which attract significant media interest. His experience enables him to provide his clients with early advice which they can rely upon throughout the life of their case. His approach to cases means he is able to quickly grasp the details of the prosecution case and to advise accordingly.
Skip to content Home About Us Insights Services Contact Accessibility