Over £5.5bn of Covid support funds lost to fraud or error [and money laundering]

The Treasury has clawed back £98m from fraudulent or erroneous Covid claims and many arrests, and it does not stop there

• "HMRC will now be hunting down those who made fraudulent claims, particularly through the Fraud Investigation Service.
• There will be a wave of civil and criminal penalties, including prison sentences.

HMRC says nearly 9% of the furlough scheme was fraudulently claimed or otherwise wrongly paid out last year.

More than £5.5bn of taxpayer money from the government's coronavirus assistance schemes.  According to HMRC, There are now 23,000 investigations into fraudulent or erroneous payments across:

• The furlough,
• Self-employment support and
• 'Eat out to help out' schemes,

It emerged on Thursday that:

• £5.2bn paid out by the government under the coronavirus job retention scheme, widely known as furlough, ended up in the hands of fraudsters or was paid in error.

HM Revenue and Customs acknowledged in its annual report that:

• About 8.7% of the £60bn it paid out under the furlough scheme in the 2020-21 tax year ended up in the hands of organised crime gangs, fraudsters or was awarded erroneously.
• £490m was the Self-Employment Income Support Scheme,
• £70m for the "eat out to help out" scheme set up to encourage people to go back to restaurants last summer.

An HMRC spokesperson said the schemes were created quickly to support people in dire need and had been subsequently strengthened to crack down on fraud.

• "The Covid support schemes have helped millions of people and businesses through the pandemic, and the government was clear that the priority was getting money to those who need it as fast as possible," the spokesperson said.
• "The Taxpayer Protection Taskforce is expected to recover £1bn from fraudulent or incorrect payments over the next two years, and work is already underway, with 23,000 ongoing investigations."

HMRC said it had so far stopped or recovered £840m of over-claimed grants in 2020/21.

Its annual report highlighted an unnamed company where:

• "Staff had been threatened with the sack if they didn't continue working despite being furloughed, even if sick".
• Tax investigators recovered £357,000 from the firm.

In another instance,

• A restaurant with "one eligible employee – the director" claimed the maximum £2,500 a month for several "off-the-book employees".
• At the same time the restaurant claimed to be closed it signed up for support under the "eat out to help out" scheme.

Steven Porter, a partner at the law firm Pinsent Masons, said:

1. "These schemes were absolutely vital to ensure the UK economy came out of the pandemic in the best possible shape. However, any handout of subsidies and aid of this size is going to attract fraudsters.
2. "HMRC will now be hunting down those who made fraudulent claims, particularly through the Fraud Investigation Service. There will be a wave of civil and criminal penalties, including prison sentences.
3. The Treasury has already clawed back £98m from fraudulent or erroneous Covid claims and a number of arrests have already been made."

Source from - https://www.theguardian.com/world/2021/nov/04/over-55bn-of-covid-support-funds-lost-to-or-error