This alert is a continuation from a March 3, 2021 post.

On 3rd March 2021, UK Chancellor Rishi Sunak announced a £100 million Taxpayer Protection Taskforce (Taskforce) to scrutinise claims made under Government financial business support schemes designed to help companies and individuals navigate their way through the economic impact of the COVID-19 pandemic.

Janet Alexander, the Director of the Taskforce at Her Majesty’s Revenue and Customs (HMRC), spoke earlier this month about her team’s work. Ms. Alexander explained that the Taskforce aims to recover £1 billion in loans, grants, and other financial schemes made to businesses in fraudulent and erroneous payments.

Schemes to be scrutinized by the Taskforce include:

  1. Coronavirus Job Retention Scheme (furlough scheme), now in place to September 2021;
  2. Coronavirus Bounce Back Loans;
  3. Coronavirus Business Interruption Loan Schemes;
  4. Coronavirus Large Business Interruption Loan Schemes;
  5. Self-Employment Income Support Schemes;
  6. Eat Out to Help Out (EOHO);
  7. Closed Businesses Lockdown Payments (CBLP); and
  8. Local Restrictions Support Grants (LRSG).

Following the implementation of The Finance Act 2020, details of claims made by employers under the furlough scheme for periods starting on or after 1st December 2020 are now published online. The aim of publishing company names and details of claims is to encourage reports of wrongdoing. An HMRC reporting line has already received over 91,000 calls from members of the public reporting suspicions of fraudulent use of Government COVID-19 financial schemes. 28,000 of these reports related in particular to the Coronavirus Job Retention Scheme (CJRS) or furlough scheme. HMRC has vowed to look at every single report.

The Taskforce is also conducting a Random Enquiry Programme where it will examine claims selected at random.

The Taskforce recognises that many claims were made when companies faced unprecedented challenges and may have been made in error. The Taskforce is keen to state that it will be sympathetic to companies that now realise mistakes were made and want to put things right.

In contrast, HMRC will use the full force of the criminal law when tackling claims made fraudulently. Common abuses of the financial schemes include misrepresenting the working hours of employees, payments not being passed on to employees, employees being asked to work or ‘volunteer’ whilst on furlough, and employers claiming for employees that have been working or were dismissed before the scheme started. In relation to loans, it is expected many have been obtained by companies that were dormant, or made to businesses that were already insolvent.

The Taskforce have highlighted that five arrests have already been made for furlough fraud and three for Eat Out to Help Out fraud but expect many more over the coming months.

Any business that has made claims for economic support due to the pandemic should now be proactive in checking the veracity of its representations and seeking legal advice in relation to any areas of concern.

About McGuireWoods’ Government Investigations & White Collar Litigation Department

McGuireWoods’ Government Investigations and White Collar Department is a nationally recognized team of over 60 attorneys representing Fortune 100 and other companies and individuals in the full range of civil and criminal investigations and enforcement matters at both the federal and state level. Our senior team is comprised of a deep bench of former federal officials, including a former Deputy Attorney General of the United States, former U.S. Attorneys, more than a dozen federal prosecutors, and an Associate Counsel to the President of the United States. Strategically centered in Washington, our Government Investigations and White Collar team has been honored as a Law360 Practice Group of the Year and has earned the trust of international companies and individuals through some of the most notable enforcement matters over the last decade.