COVID-19 Government Schemes Fraud Investigations
Specialist Solicitors for Bounce Back Loan, Furlough and Government Support SchemeFraud Investigations
- Company Directors,
- Business owners,
- Self-employed individuals,
- Bounce Back Loans (BBLS),
- The Coronavirus Job Retention Scheme (Furlough),
- The Self-Employment Income Support Scheme (SEISS),
- Eat Out to Help Out Scheme,
- Coronavirus Business Interruption Loans (CBILS),
- Other COVID-19 financial support introduced during the pandemic.
Specialist Defence for Bounce Back Loan Fraud Investigations
The Bounce Back Loan Scheme provided financial assistance to businesses during the COVID pandemic. HMRC, the National Crime Agency, the Insolvency Service and police forces are scrutinising applications where it is suspected that loans were obtained dishonestly or that funds were used in a manner inconsistent with the rules of the scheme.
KANGS is regularly instructed by directors and business owners who have:
- received correspondence concerning a Bounce Back Loan investigation,
- been invited to attend an interview under caution,
- become the subject of insolvency investigations or director disqualification proceedings,
- been accused of providing inaccurate financial information in support of a loan application, or
- been accused of misusing Bounce Back Loan funds.
Not every investigation involves deliberate fraud. Many businesses were required to make important decisions during unprecedented circumstances, often based upon changing Government guidance. Our experienced solicitors carefully analyse the evidence, identify legitimate explanations and develop a robust defence strategy tailored to each client's individual circumstances.
Representation in Furlough Fraud Investigations
HMRC continues to investigate employers suspected of making incorrect claims under the Coronavirus Job Retention Scheme.
These investigations may arise from compliance checks, whistleblower reports, payroll reviews or information obtained during wider tax or corporate investigations. In some cases, employers face allegations that employees continued working whilst on furlough or that claims were submitted in respect of individuals who were not eligible under the scheme.
KANGS advises and represents employers, directors and individuals facing allegations relating to:
- incorrect furlough claims,
- payroll irregularities,
- false accounting;
- fraud by false representation,
- conspiracy allegations, and
- associated tax or money laundering investigations.
Every investigation requires careful consideration of the available evidence, the Government guidance applicable at the time and the circumstances in which claims were made.
Our experienced solicitors carefully analyse the evidence, identify any legitimate explanations and develop a defence strategy tailored to each client's individual circumstances. Obtaining specialist legal advice at an early stage can be crucial in protecting a client's position and preventing matters from escalating further.
Investigations into other COVID-19 Government Support Schemes
Alongside Bounce Back Loans and furlough claims, enforcement agencies continue to investigate the alleged abuse of other financial assistance schemes introduced during the pandemic.
KANGS advises and represents clients facing investigations concerning:
- Self-Employment Income Support Scheme (SEISS) claims,
- VAT deferrals, and
- Coronavirus Business Interruption Loan Scheme (CBILS).
Many investigations involve multiple agencies working together, with allegations extending beyond the original funding application. Our experienced team of fraud solicitors is adept at managing complex investigations involving multiple regulators, prosecuting authorities and enforcement agencies.
Why Choose KANGS
KANGS has established a national reputation for representing businesses, company directors and individuals in fraud investigations.
Our team of fraud solicitors regularly advises clients under investigation by HMRC, the National Crime Agency, the Insolvency Service, the Serious Fraud Office, the Financial Conduct Authority and police economic crime units throughout England and Wales.
Clients instruct KANGS because we provide:
- specialist fraud defence expertise,
- representation at interviews under caution,
- advice and representation in restraint and confiscation proceedings,
- representation in criminal proceedings where required, and
- practical, commercial advice designed to protect both personal and business interests.
Our solicitors understand that many clients have never previously been involved in a criminal investigation. We provide clear, practical advice and robust representation throughout every stage of the investigation and, where necessary, any subsequent court proceedings.
For further information regarding Government Schemes Fraud, please see our Frequently Asked Questions.
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Got a question?
What happens during a COVID-19 fraud investigation?
Being contacted by an investigating authority can be daunting. However, an investigation does not necessarily result in criminal charges.
Depending upon the nature of the allegations, investigators may:
- request financial and business records,
- obtain production orders,
- freeze bank accounts,
- execute search warrants,
- invite you to attend an interview under caution,
- commence director disqualification proceedings, or
- pursue criminal prosecution.
It is essential to obtain specialist legal representation before responding to investigators or attending an interview. Our solicitors can provide early legal advice that enables you to make informed decisions and protect your legal position.
How we can help
Our team of specialist solicitors provide the following services:
- Initial Consultation and Legal Advice: Confidential consultation to discuss the case details, provide an initial assessment, advise on legal rights and options as well as provide tactical guidance and a roadmap on the best way to progress matters.
- Advice and representation in relation to any criminal investigation by HMRC/NCA/NATIS alleging serious fraud.
- Advice and representation in relation to any criminal proceedings brought by the Insolvency Service.
- Expert guidance on defending any civil claims made by the Insolvency Service or Liquidator asserting personal liability against the company directors for the loans and grants made to a company.
- Defence of companies and individuals in relation to criminal allegations of Government contracts for the supply of goods and services being obtained unlawfully by fraud or bribery & corruption.
- Representation of companies or businesses in civil contract disputes arising from contracts and agreements executed during the Covid-19 pandemic.
Contact KANGS
The expert lawyers at KANGS are available to assist you. We can arrange initial consultations in person, by video call or telephone.
Please contact one of our experts listed below or contact us at:
Bounce Back Loan fraud
The Bounce Back Loan Scheme was created to lend up to £50,000 to businesses which had been affected by the lockdowns. The loan was for the equivalent of 25% of the business’s most recent annual turnover, up to a maximum loan of £50,000. The loans featured a low interest rate and are widely regarded as having been an effective way for businesses to return to profit-making after the pandemic.
Many businesses which used the loans have been highly successful as a result. However, due to the absence of checks, the Government suspects that there were many businesses which claimed funds either in error or dishonestly. For example, it is alleged that some businesses exaggerated turnover figures in order to secure loans or apply for the loan multiple times with different lenders.
The Taxpayer Protection Taskforce is committed to recovering wrongly paid-out loans and taking action against the individuals responsible. This has included compulsory liquidation of businesses or making personal claims against officers of the company.
Furlough Scheme fraud investigations
The Coronavirus Job Retention Scheme (‘the Furlough Scheme’) gave money to employers who were required to close their businesses during the lockdown restrictions. It enabled them to pay their staff 80% of their normal wages up to a specified limit. This was intended to reduce mass-redundancies in the worst affected sectors, such as hospitality.
Whilst the Furlough Scheme was largely successful in preventing redundancies, it did not impose significant verification on the applications made by businesses due to the lack of time available for planning.
The Government estimated that the value of fraudulently claimed Furlough Scheme money amounts to £7.3bn. The most common fraud allegations made against businesses include:
- claiming furlough money for non-existent or dismissed employees
- claiming furlough money for employees who continued to work during lockdowns
- misrepresenting the number of hours their employees worked to maximise the furlough payment
If one of the investigating agencies suspects furlough fraud, it is likely to pursue criminal charges.
Eat Out To Help Out Scheme fraud
The ‘Eat Out to Help Out’ scheme was introduced by the UK Government to encourage people to return to restaurants after lockdown rules had been lifted. The Eat Out to Help Out Scheme allowed restaurants to claim half the price of a meal from the Government, whilst customers would pay the other half. The maximum amount claimable was £10 per customer.
The Eat Out to Help Out scheme was open to fraudulent abuse because the Government largely relied on businesses to report the meals which had been purchased by customers, and in return the Government would pay up to half of the reported cost back to the business.
However, it is alleged that some businesses dishonestly overreported their sales, leading to the Government paying an inflated sum for meals which had never actually been consumed. Other allegations include claims that meals ordered as takeaways had been eaten in the restaurant or that claims for the cost of alcohol were being put through the scheme illegally.
HMRC has taken an interest in pursuing businesses it believes have dishonestly claimed money from the Eat Out to Help Out scheme. Its officers have conducted searches of tills and physically visited restaurants to verify that the business is capable of accommodating the reported number of diners and to check that the sales did in fact take place.
What is the punishment for Covid-19 Financial Scheme Fraud?
Depending on the circumstances of the case, investigators will be considering the following possible offences:
- fraud by false representation
- fraud by abuse of position
- fraud by failure to provide information
- cheating the public revenue
- conspiracy to defraud
Conviction for one of the above can result in a prison sentence. Other sentences include a fine or community order where the nature of the offence is less serious.
There is also a possibility that civil action will be taken. For example, civil recovery orders, civil penalties or civil settlements have previously been issued.
Which agency is investigating the Covid-19 Financial Frauds?
Primarily, fraud investigations into the Covid-19 loans and grant schemes are handled by the National Crime Agency (NCA) or HM Revenue & Customs (HMRC). The National Investigation Service (NATIS) has also played a role with investigations into the abuse of Local Government grants.
The UK Government has established a Taxpayer Protection Taskforce for investigations into Covid-related fraud. The Taskforce comprises of investigators from HMRC and the NCA, to investigate and pursue those who have allegedly abused the schemes.
Where an agency suspects that a Government scheme has been abused or used fraudulently, it is able to take criminal or civil action against the suspected wrongdoer and obtain an Account Freezing Order to freeze all relevant bank accounts.
What happens if the company has gone into liquidation?
Where a business has become insolvent or gone into liquidation after wrongly claiming Bounce Back Loans, Furlough Scheme funds or other Government grants, it has been known for the Insolvency Service or Liquidator to make a claim against the company officers personally.
In addition, there may be an application for a director disqualification order in addition to the claim for the wrongly paid money from the company director.
Self-employment Income Support Scheme (SEISS)
The SEISS operated similarly to the Furlough Scheme, except it applied to those who were self-employed rather than employed. The scheme allowed self-employed individuals to receive one or more of five grants, however, the eligibility requirements for each grant varied.
HMRC have been investigating those who obtained a SEISS grant to ensure they were eligible for it at the time. As each grant’s eligibility requirements were different, many claimants unknowingly claimed a grant for which they were not eligible, despite having been eligible for other grants. Additionally, some claimants did not realise that the grants were taxable and have since faced investigations for failing to declare the funds on Tax Returns.
If you receive a Tax Assessment from HMRC, we can advise you in relation to the appropriate representations to make to HMRC in an effort to bring the investigation to a conclusion.
VAT Deferrals
In order to support businesses which were adapting to the changes caused by the Covid-19 pandemic, the UK Government allowed businesses to defer VAT payments to 31 March 2021 if the scheduled VAT payment fell due between 20 March 2020 - 30 June 2020. This provided businesses with temporary working capital in the absence of a regular source of income.
Those who could not pay the VAT by the deadline were invited to join the VAT Deferral New Payment Scheme which spread repayments over 11 instalments. Those companies which have not been able to repay the deferred VAT, or those which deferred payment with the intention to defraud HMRC, can expect further action and VAT Assessments to be issued against them.
HMRC is able to bring criminal and/or civil proceedings against individuals who have not paid VAT. If you are concerned about an HMRC VAT investigation into you or your business, please get in touch with us.
Who can I contact for advice & help?
If any of the issues highlighted above affect you or your business, please get in touch with us.
Our team can provide legal advice and guidance on the appropriate steps to take whether the issue is one of criminal or civil liability. Our expert criminal and civil litigation solicitors are available to help you.
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