Warning that furlough fraud cash may not be recovered

Kevin Humphreys of Integrated Dispute Resolution comments in an article published on Sunday 22 November in The Telegraph. Full article below.

Billions of pounds of furlough cash stolen by fraudsters and criminals is unlikely to be recovered after analysis suggested Her Majesty’s Revenue and Customs would need to double its workforce to tackle the problem.

As much as 5% of the total funds awarded to help bailout businesses is believed to have been siphoned off by gangsters and conmen.

It is feared that much of the money has already been spent or invested in other criminal enterprises.

Organised crime groups, including some based overseas, are thought to have targeted the furlough and bounce back loans schemes, which were seen as an easy, low risk cash bonanza. Only a handful of arrests have been made.

Officials estimate it would take at least 500 staff to track down £275 million handed out through 10,000 of the most high-risk furlough grants. But such is the scale of the problem that experts believe HMRC has little chance of recovering most of the cash.

Analysis carried out by the legal services firm, Integrated Dispute Resolution, estimates HMRC would need to double its entire workforce to make any impact on the losses. Kevin Humphreys, tax expert at IDR said: “HMRC would need 54,500 staff to claw the coronavirus losses back, broadly speaking its entire UK workforce.”

He said one solution might be for the Government to work with private firms to target fraudsters and tax dodgers.

Meanwhile, accountancy giant Blick Rothernberg has warned small businesses that have claimed under the furlough scheme that they could face extra tax scrutiny. It warns clients to be prepared for “random or selective” investigations.