Over 91,000 fraud allegations made to HMRC’s fraud hotline during first nine months of Covid-19 crisis

·      Concerns over furlough fraud driving many allegations
·      Likely to lead to a sharp rise in HMRC investigations
 
Over 91,000 fraud allegations were made to HMRC’s fraud hotline during the first nine months of the coronavirus crisis*, says PfP, the experts in tax investigation insurance.
 
PfP says widespread concerns about furlough fraud are behind many of the allegations. The 91,000 calls made during the first full nine months of the coronavirus pandemic (April – December 2020) average out at just over 10,000 per month, higher than the monthly average of 9,000 calls that were made in the twelve months prior to that.
 
Alongside allegations of furlough fraud, a number of calls alleging abuse of the Government’s ‘Eat Out to Help Out’ scheme are likely to have been made. Some restaurant businesses were accused of faking excess orders so as to claim greater amounts from the Government’s scheme.
 
PfP says HMRC is likely to add significant resource in order to investigate as many of the fraud allegations that have been made as possible. With the Covid-19 crisis leading to huge levels of public spending to support the economy, HMRC may now look to increase the pressure on those under investigation in order to recoup as much revenue as possible. This may mean more intensive investigations and tougher penalties being handed out in the coming months.    
 
PfP, however, points out that a large number of the fraud allegations made during Covid-19 are likely to be false, potentially leaving many businesses facing a lengthy period under investigation despite committing no wrongdoing. Historically, a lot of calls to tax fraud hotlines involve an element of mischief making e.g., fraud reports made by warring neighbours or former “romantic” partners.
 
Kevin Igoe, Managing Director at PfP, says: “With so many fraud allegations being made to HMRC during the Covid-19 crisis, there is no doubt that many of them will end up being false.”
 
“Whilst those cheating the tax system should be held to account, heightened tax investigations are the last thing that decent, law-abiding businesses need at the moment.”
 
“Months of lockdown restrictions have already put many businesses under huge pressure. HMRC investigations can be costly, time-consuming and can cause enormous stress for the owner-managers and directors involved.”
 
“HMRC will be looking to up the pressure on businesses in order to recoup as much tax revenue as possible in the coming months. It is therefore now more important than ever that businesses have cover in place to ensure they get the advice and support they need if an investigation is launched.”
 
*Source: HMRC