01 December 2021

HMRC discusses the work of the taskforce set up to target fraud across the Covid support schemes created by the government, and what businesses should consider


The worst days of the pandemic appear to be over. The economy has re-opened and the coronavirus job retention scheme (CJRS) has closed. We are all now busy figuring out what the much talked about ‘new normal’ looks like. Although CJRS is well behind us, the work on it has not finished.

 

What businesses need to do

The next step every business must take is critical. CJRS grants, and any other Covid grant a business has received, must be properly accounted for. Covid grants are income. They must be treated the same as any other source of income and declared on the CT600 tax return. For very obvious reasons, tax returns need to be right. If they’re not, businesses can face easily avoidable compliance checks to correct the position.

 

How HMRC has tackled, and is tackling, fraud across Covid-19 schemes

Covid help schemes supported millions of people and businesses through the pandemic. The CJRS alone protected 11.7 million jobs, equivalent to over a third of the entire workforce. We’ve paid out approximately £100 billion to millions of people across the UK. We have, in effect, enabled them to pay their mortgages and put food on the table.

The schemes were set up quickly, so that they could be easily accessed by the millions who needed support. The approach taken meant that the schemes were as accessible as possible, while protecting public money against error and fraud. Realistically, there was always going to be a level of fraud and error – that applied to government schemes all over the world. They were attractive to both criminal attack and opportunistic fraud. We knew people would make mistakes particularly with new, unfamiliar schemes and under such difficult circumstances.

So, we put in place a range of measures to protect the schemes against abuse from organised criminal attacks, inflated claims, and other non-compliance. We tackled non-compliance in three broad ways:

  • we designed compliance into schemes to prevent incorrect or fraudulent claims being accepted,

  • we promoted good compliance through education and good customer service such as easy ways to correct and repay overclaims; and

  • we intervened where we saw something had gone wrong through post-payment compliance.

The best counter-fraud measures are those that stop it happening in the first place. We effectively countered the threat from organised crime – just 0.3% of the CJRS grants paid were estimated to be lost to organised criminals.

The schemes were designed to protect against fraud and error by only making grants to businesses matched to information already on HMRC systems wherever possible. Over 100,000 ineligible or mistaken claims were prevented by automated controls being built into the digital claim process.

Our data and risking experts ran checks before payment and blocked suspicious claims that showed indications of criminal activity. Some claims would be blocked after triggering fraud alerts but later paid, after further checks showed it was a legitimate claim.

The vast majority used the schemes as they were supposed to. Honest mistakes will have been made and we’re taking a proportionate approach to recovering overclaimed grants. Many businesses claimed while under considerable pressure. Where claimants have made a genuine error, we are supportive and reasonable. An easy-to-use online system enabled claimants to correct mistakes quickly and easily.

 

What will the Taxpayer Protection Taskforce (TPT) do?

Our role is to create a level playing field, build public trust and protect taxpayers’ money. We do that by targeting those who have deliberately sought to cheat the system.

We are doing this through the work of the TPT, which will carry out around 30,000 inquiries into incorrect and fraudulent claims by the end of the 2022/23 financial year.

We identify potentially fraudulent or mistaken claims primarily through data analysis. Claims are examined against other information we hold to spot discrepancies. We have written to tens of thousands of claimants asking them to check they claimed correctly where our initial checks suggested they may have claimed too much.

Specialist compliance investigators have opened thousands of inquiries so far into suspected claims of both fraud and error. A claimant will be asked to supply evidence to support their claim, so good record-keeping is crucial. Copies of these records should be retained for at least six years and should include:

  • the amount claimed and the claim period for each employee

  • the claim reference number

  • the calculations, in case we need more information about claims

  • for employees who were flexibly furloughed, usual hours worked including any calculations that were required

  • for employees who were flexibly furloughed, actual hours worked.

Our compliance efforts are focused on those who sought to intentionally defraud the schemes. Some employees will have completed small amounts of essential work while furloughed, such as turning off an alarm if it went off one afternoon. We are not looking to penalise this kind of activity.

Our ask of you is simple – include any Covid grants as income on your tax return, contact us if you realise there’s a mistake in a CJRS claim, and keep those records. 


Featured in the December 2021 / January 2022 issue of Professional in Payroll, Pensions and Reward. Correct at time of publication.