UK: COVID-19 business support schemes under the microscope from new Taxpayer Protection Taskforce

By Emily Au, Andy Brown, Jack Prytherch, Christopher Young, Nicola O'Connor

03-2021

The UK Treasury says it will launch a Taxpayer Protection Taskforce this week to address fraudulent or mistaken claims from the range of taxpayer-funded COVID-19 support schemes put in place since the beginning of the pandemic.

Amidst the continuing stream of economic support from the Government to businesses to ease difficulties due to the coronavirus outbreak, the Treasury is taking further steps to recoup money that has been overclaimed by businesses, whether fraudulently or in genuine error, through COVID-19 support schemes.  Comments made by the Chancellor of the Exchequer, Rishi Sunak, this weekend indicated that £100 million had been earmarked for a new ‘Taxpayer Protection Taskforce’, equipped with up to 1,265 HMRC staff, to detect and tackle fraud and error within the schemes. The Taskforce is likely to operate in addition to any existing inquiries and enforcement action being taken by HMRC and other agencies.

The Taxpayer Protection Taskforce is expected to police all taxpayer-funded coronavirus support mechanisms, including (amongst others) the Coronavirus Job Retention Scheme (better known as the ‘furlough’ scheme), the Self Employment Income Support Scheme, the Bounce Back Loan Scheme, Coronavirus Business Interruption Loan Scheme and the Coronavirus Large Business Interruption Loan Scheme. It remains to be seen whether the Taskforce will be responsible for the entire economic support package, such as tax holidays and deferrals, coronavirus grants and local authority funding.

We are already seeing compliance checks from HMRC but both civil and criminal investigations are now expected to be launched with ever increasing force. Claims made in relation to the COVID-19 support schemes, even if made in good faith, may face investigation if mistakes were made with the application process, ongoing compliance requirements or record-keeping. Many businesses will be considering conducting some form of COVID-19 business support ‘risk assessment’ to make sure there are no surprises when HMRC contact them. 

The launch of the Taxpayer Protection Taskforce is expected to be formally confirmed in the UK Budget announcement on 3 March 2021, with further details of the Taskforce’s remit and enforcement powers to follow. Our dedicated Tax Disputes and Investigations team will be closely following the announcements and will provide relevant updates and guidance as soon as available.