The UK authorities are taking steps to recover money that was fraudulently claimed under the government’s various Covid-19 support schemes. Arrests have already been made and criminal prosecutions are likely.
Fraud solicitors – England and Wales
If you have been accused of fraud, contact our criminal defence solicitors now. We specialise in defending fraud and financial crimes. We can represent you throughout the proceedings. Sometimes immediate legal advice is necessary, which is why we are available to take your call 24 hours a day, 7 days a week. We also offer free police station representation.
What is Covid-19 fraud?
During the course of the Covid-19 pandemic, the UK government implemented a number of support schemes for businesses and individuals. Some of the most popular include the:
- Coronavirus Job Retention Scheme (CJRS) – also known as furlough
- Eat Out to Help Out Scheme
- Bounce Back Loan Scheme
- Self-Employment Income Support Scheme (SEISS)
Due to the rapidly evolving situation, many loans were handed out without any due diligence taking place. This means some may have mistakenly claimed more than they were entitled to, while others may have deliberately abused the system.
Examples of Covid-19 fraud include:
- Claiming furlough for employees who do not exist or who have already been laid off
- Claiming furlough for employees who are still working or who are ‘off the books’
- Reducing an employee’s wage below that which is being claimed
- Claiming Eat Out to Help Out payments, even though the restaurant is closed
- Claiming Eat Out to Help Out payments on ineligible transactions
- Selling bogus companies online to enable fraudulent furlough/bounce back loan claims
- Overclaiming or backdating claims
What is being done to tackle Covid-19 fraud?
The authorities were aware that the system was open to abuse, and it has not taken long for recovery measures to be implemented.
In the 2021 Spring Budget, Chancellor Rishi Sunak announced that £100 million extra funding would be given to HMRC. This has been spent on a Taxpayer Protection Taskforce, a 1,250- strong department that is systematically analysing claims made under the Covid support schemes. Hundreds of thousands of inquiries have already been opened, and those suspected of wrong-doing have been receiving letters from HMRC.
But that is not all. Other UK authorities are also focusing their efforts on tackling Covid-19 fraud. The National Crime Agency is investigating large-scale scams carried out by organised criminal groups. The National Investigation Service is conducting dawn raids and seizing evidence from suspects’ homes. And the Serious Fraud Office is investigating fraudulent claims with a value of at least £1 million.
Will there be civil or criminal prosecutions?
Anyone suspected of Covid-19 fraud could face either a civil prosecution or a criminal prosecution. While HMRC generally favours civil proceedings, it will pursue criminal prosecution in order to send a deterrent message, or in serious cases where egregious
behaviour has taken place. Where large-scale fraud and/or organised criminal activity is concerned, it will almost certainly result in criminal prosecution.
What are the penalties for Covid-19 fraud?
The penalties for Covid-19 fraud very much depend on the extent of the fraud, and the defendant’s intent.
Those who have mistakenly claimed an overpayment are being given a grace period to come forward and co-operate with HMRC. The Finance Act 2020 offers a possible moratorium for people who return the monies in full within 90 days of realising their mistake.
HMRC said: “We continue to encourage businesses and individuals to come forward and self-correct if they have made a mistake in their claim. We appreciate claimants may have made genuine mistakes and no one who has tried to do the right thing but made an honest mistake has any need to be concerned, as long as they work with us to put it right.”
Those who fail to communicate their errors to HMRC, or who fail to co-operate, will have to repay the wrongfully claimed payments in full, plus interest. There may also be an additional financial penalty.
However, anyone who deliberately defrauds the system could face criminal proceedings instead. If convicted by a criminal court, the maximum available penalty under the Fraud Act 2006 is:
- 12 months in prison and/or a fine, if convicted for a summary offence
- 10 years in prison and/or a fine, if convicted on indictment
Have people been arrested for Covid-19 fraud?
Arrests have already been made in relation to Covid-19 fraud. The first arrest for furlough fraud happened in July 2020. The man, who is from the West Midlands, is suspected of defrauding the government out of £495,000. His property was searched and electronic devices seized. His business bank accounts have also been frozen.
In May 2021, two people were arrested over a suspected £3.4 million furlough fraud. The individuals, both from Bradford, have now been released under investigation. Their bank accounts have also been frozen.
What investigatory powers do the authorities have?
The UK authorities – including HMRC – have extensive powers of investigation and enforcement. They can request search warrants and seize items from people’s homes and businesses. They can interview suspects and make arrests. These powers have been extended even further under the Finance Act 2020.
Individuals and businesses may also be subject to a Freezing Order (where a civil investigation is being conducted) or a Restraint Order (where a criminal investigation is being conducted). This freezes personal/business assets. Only nominal living expenses can be withdrawn until the case has concluded. This can make life very difficult for those concerned, although it is possible to request a variation if unnecessary hardship is being caused. Our solicitors can help you with this.
What should I do if I’m accused of Covid-19 fraud?
If you have accidentally overclaimed under one of the Covid-19 government support schemes, you should contact HMRC as soon as possible to report the mistake. HMRC will likely show leniency to those who self-correct and/or co-operate with their investigations.
If you have been accused of deliberately abusing the system, then the situation is much more serious. If this is the case, then you need to get expert legal representation from a fraud solicitor – such as the fraud solicitors here at Ashmans. Fraud is a serious allegation and can result in a period of imprisonment, and/or a substantial fine. It is essential that you seek the help of an experienced defence solicitor.
Can I get free police station representation?
You may not be aware that you are a suspect in a criminal fraud case until you are arrested or asked to attend a voluntary interview. Either way, it is vital that you ask a solicitor to represent you. Police station representation is free to everyone under the Legal Aid scheme. You can get advice from the duty solicitor, or you can ask a solicitor of your choosing to accompany you. Be wary of being invited in for a ‘chat’. This amounts to a formal interview and you should ask a solicitor to go with you.
Can I stop a search and seizure?
Alternatively, you may become aware of the investigation when the authorities arrive to search your property. These are often known as dawn raids, on account of the fact that they usually happen in the early hours of the morning. Clearly, this will be very distressing for you and your family members.
However, so long as the authorities have the necessary warrant, you cannot stop a search from taking place. You can ask to see the search warrant, but if the warrant is valid, then you cannot cause an obstruction. You can ask for the search to be delayed until your legal representative has arrived. The authorities do not have to comply with this request, but it is always worth asking.
The authorities can also keep anything they think could aid their investigation, including computers and mobile phones. But they cannot seize materials that are subject to legal privileges, such as communications between you and your solicitor.
What happens during a Covid-19 fraud investigation?
Criminal fraud investigations can last for months, sometimes even years. It is likely that your property will be searched. You may also be arrested and interviewed under caution. Normally, you will then be released under investigation (RUI). This means that you are free to go home, but the investigation against you is ongoing. There is no limit to the amount of time you can be RUI.
If the authorities decide that there is enough evidence to prosecute you, then charges will be formally laid. You will be asked whether you wish to plead guilty or not guilty. If you plead not guilty, there will be a criminal trial. Minor offences of fraud are heard at the Magistrates’ Court, whereas more serious offences are heard at the Crown Court.
Fraud solicitors – England and Wales
If you have been accused of criminal fraud, please contact us at Ashmans Solicitors. The UK government is focusing its efforts on tackling deliberate, large-scale Covid-19 fraud. Arrests have already been made and it is likely that many more will be made over the coming months. We are on hand to provide free police station representation and expert legal advice. We are highly experienced in defending all types of fraud prosecutions and know how to secure the best outcome on your behalf.
For a free initial enquiry, call us on 0333 009 6275. We are available 24 hours a day, 7 days a week.