HMRC has stated its continued commitment to recovering taxpayers’ money that was wrongfully paid out under the government Covid support schemes. Millions of pounds have already been recouped, with hundreds of people arrested on suspicion of Covid fraud.
Going forward, wrongful claims will be identified through business-as-usual compliance work. HMRC investigations can last for many months before an individual receives a letter of concern in relation to possible over claims.
Company directors who over claimed under the Covid support schemes may face further repercussions in the form of Director Disqualification proceedings. This is an added concern, as it can result in a director being ‘struck off’ for between two and 15 years.
If you are worried about an HMRC investigation and/or director disqualification proceedings, please contact us at Altion Law for a confidential discussion with one of our solicitors. Either make a Free Request For Call Back or call us directly on 01908 414990.
HMRC Covid Fraud and errors
There has been a lot of speculation as to how much money has been lost due to Covid fraud and errors. Now, HMRC estimates the figure to be around £4.5bn, of which:
- £3.5bn was lost through the Coronavirus Job Retention Scheme (CJRS or ‘furlough’)
- £1bn through the Self Employed Income Support Scheme (SEISS)
- £71m through the Eat Out to Help Out scheme
In the 2021 Spring Budget, it was announced that a specialist Taxpayer Protection Taskforce would be set up within HMRC to recover funds lost due to Covid fraud and errors. So far, it has opened over 40,000 compliance cases and contacted over 132,000 customers.
As a result of the taskforce’s work, and other compliance activity conducted before its creation, HMRC expects to recover over £762 million of the funds lost. In a policy paper, HMRC states that: “no amount of error and fraud is acceptable, but it is not possible to recover everything.”
Business-as-usual compliance tax activity
It was always intended that the Taxpayer Protection Taskforce would have a two year life cycle. That remains HMRC’s plan, which is why the taskforce has begun to wind down operations. It will cease to exist entirely as of September 2023.
In its stead, Covid errors and fraud will be identified though business-as-usual tax compliance activities. HMRC states: “We are dedicated to tackling error and fraud in the COVID-19 financial support schemes. Our role is to make it easy to get tax right and hard to bend or break the rules. That is achieved by taking action against those who have deliberately sought to abuse the COVID-19 financial support schemes, while recognising there will be people who have made honest errors.
Throughout our compliance response, we’ve taken a reasonable and supportive approach to those who have made genuine mistakes – and have given these customers the opportunity to correct errors without fear of sanctions.”
Genuine errors
HMRC has always said that it does not wish to impose heavy sanctions where genuine mistakes have been made. In these cases, individuals can expect to have to repay the money that was over claimed. There may be additional financial penalties, including interest and fines.
However, even where honest errors were made, company directors still face the risk of disqualification. These proceedings will arise if HMRC believes that you failed to meet your fiduciary duties, making you ‘unfit’ to act as a company director.
Find out more about Company Director Disqualification.
HMRC Covid Fraud
HMRC says that many fraudulent claims were blocked from being paid out (pre-payment). However, arrests have been made in relation to Covid fraud, and HMRC investigations are underway for suspected fraudulent claims paid out under the Covid financial support schemes.
HMRC may choose to pursue either civil or criminal sanctions where allegations of fraud are made. Either way, the penalties will be much more severe than if a genuine error has been made. Where criminal proceedings are taken, the potential penalties include imprisonment and an unlimited fine. Where a company director is involved, it is also very likely that HMRC will pursue a director disqualification.
How can we help?
Our solicitors represent those who are subject to HMRC investigations, including those involving allegations of Covid fraud or errors. We also represent those who face the threat of director disqualification.
If HMRC is investigating you – or is pursuing proceedings against you – contact us at Altion Law for a free confidential discussion with a member of our team. Please either make a Free Request For Call Back or call us directly on 01908 414990 and we will be pleased to help you.