HM Revenue & Customs made his first arrest for alleged fraud related to the UK government’s leave scheme in July.

As more reports come to light, with inevitably strong political and public support, governments prepare to aggressively crack down on Covid relief fraud.

These abuses stem from shortcomings in the race to launch stimulus packages from the early stages of the epidemic.

Whether through leave programs or guaranteed loans, most governments so far have relied on ex ante checks on lenders or whistleblowers exposing abuse.

British lawyers have anecdotally reported an “avalanche” of complaints that could predict significant whistleblower activity.

As the dust settles, regaining public trust through accountability for the use of public funds will become paramount for policy makers.

UK anti-fraud efforts

The Covid-19 fraud control team created in March 2020 has published a set of principles to guide public bodies in preventing fraud during the pandemic.

However, there is a lack of clarity as to how the UK government expects these checks to be carried out in practice and it has yet to announce a comprehensive framework for checks and audits of funds disbursed. .

While the government has put in place a range of business assistance programs, we consider that the programs most vulnerable to misrepresentation, to be dealt with as a priority, are:

  • the Coronavirus Retention Program (CJRS)
  • the Coronavirus Business Interruption Loan Program (CBILS)
  • the coronavirus rebound loan program (CBBLS)

due to their wide applicability and low eligibility criteria

The CJRS has been available since March 2020 for all UK employers with payroll plans established before February 28, 2020. Employers can claim 80 per cent of wages from employees on leave not worked, up to £ 2,500 per month, plus certain other contributions.

With the CJRS, the UK government appears to rely heavily on ex post controls and whistleblowing, employees are encouraged to report employers who force staff on leave to work.

It reserves the right to retrospectively verify complaints and has implemented recovery mechanisms in the event of fraudulent or erroneous complaints.

The bill currently before Parliament will also give HMRC the power to inspect whether claims have been overpaid, whether payments have been used to pay employees on leave and to hold company executives jointly and severally responsible when they made false claims.

How HMRC intends to deliver is unclear.

Second, CBILS, also introduced in March 2020 and administered by the British Business Bank, provides loans of up to £ 5million to SMEs through specified lenders.

Loans are 80% government guaranteed, applicants must have UK-based business activities with a maximum turnover of £ 45million, and the lender must believe the funding will enable the business to get out of any difficulty in the short or medium term. .

The third program is the CBBLS, introduced in May 2020 to support small businesses.

It allows approved lenders to grant loans of up to 25 percent of turnover or £ 50,000, with an annual interest rate of 2.5 percent. The government covers the interest for the first year and guarantees the entire loan.

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