Potential widespread of fraud and abuse to different Government schemes

The Governments plans to widen the job retention scheme to include part-time working could see widespread abuse and fraud, said leading tax and advisory firm Blick Rothenberg.

Simon Rothenberg, a senior manager at the firm said that: ‘With the widening of the job retention scheme to include part-time working, the temptation for employers to exaggerate claims, especially in times when they need cash desperately, is likely to increase.’

He added that: ‘This will make HMRC’s job in policing the scheme and auditing claims even harder and more time consuming, particularly for those working remotely. Hundreds of workers have already reported employers for furlough scheme fraud. Employers have claimed furlough while asking staff to continue working and, in some cases, claiming the grant under the job retention scheme but not telling their staff this was being done.’

Simon noted that: ‘While the furlough scheme is most likely to be open to abuse, there are other government measures which could be open to fraud. The self-employment income support scheme requires people to still be working in the business which they reported on their 2018–2019 tax return, on which this scheme is based. But many may not be, and it will be extremely difficult for HMRC to check in the short term.

‘Another scheme which could be abused, are bounce back loans, given the lack of detail required to obtain the loan. It is possible that companies will draw down on these government backed loans, withdraw the cash to pay the business owners (who, if they have been remunerated by dividends have received no support to date) and then liquidate the company if they do not see a possibility of returning the business to profitability.’

Simon concluded that: ‘HMRC has set up a fraud hotline to identify and follow-up potential abuse. While they and the Government will undoubtedly review and audit a number of the claims and potential abuse, the level of businesses claiming under each scheme and the number of staff it would require to check all of these means that there could be millions of pounds lost to people abusing the schemes.’


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