The Department for Business says it is “continuing to crack down on Covid-19 fraud and will not tolerate those that seek to defraud the British taxpayer”. The statement comes after a National Audit Office (NOA) report criticised the government’s handling of the Bounce Back Loan scheme, concluding that counter-fraud measures were “implemented too slowly”.
Bounce Back Loan Scheme and Fraud
Many investigations into Bounce Back Loan fraud are underway. It is widely accepted that the scheme was open to abuse, as many applications were processed without any due diligence taking place. Now, the Department for Business estimates that as of March 2021, 11% of all loans were fraudulent – amounting to £4.9bn.
The figures were outlined in a report recently published by the National Audit Office. In the report, the government suggested that a third of loans, worth £17bn, may never be repaid. This is partly due to fraudulent activity, and partly due to legitimate borrowers defaulting on payments. In fact, the British Business Bank says £1.3bn has been defaulted on already.
The NAO says anti-fraud checks were inadequate, with “limited verification, and no credit checks on borrowers”. It highlights that 13 additional counter-fraud measures were later implemented, but that “most came too late to prevent fraud and were focused instead on detection”. Some were introduced “after 61% of the loans by value had been made”.
2,100 Intelligence reports of Fraud
The Department for Business says it is committed to recovering funds fraudulently paid out under the Bounce Back Loan scheme. The National Investigation Service (NATIS) is the unit tasked with tracking down Covid-19 fraudsters. As of October 2021, it had received more than 2,100 reports of fraud, resulting in 43 arrests and more than £3m in recoveries.
Various government agencies are working together to combat Covid fraud. HMRC is conducting compliance checks and additional investigations, while the National Crime Agency is also looking into large-scale scams. The NATIS has been carrying out dawn raids, although reportedly only has the capacity to work on 50 cases a year.
Campaigners have raised concerns that those who took out legitimate loans – but cannot pay them back – could be unfairly penalised. Many businesses have gone bust since taking out a loan in good faith. Others are still struggling financially. As one campaigner said: “how can you pay back a Bounce Back Loan, when you haven’t bounced back?”
Are you under Investigation?
The government has said that the NATIS will be aggressively pursuing Covid-19 fraudsters. This includes investigations into Bounce Back Loans. This is a frightening prospect for anyone who erroneously claimed more than they were entitled to. It could also spell trouble for those who cannot repay the loan due to insolvency or ongoing financial issues.
If you have received a letter regarding an investigation, you need to call us at Altion Law. You need to handle the situation delicately. We specialise in HMRC investigations and know what to do. We can work with you to achieve a favourable outcome. These investigations should not be taken lightly – arrests have been made, with more likely to come.
If you would like to have a free confidential discussion with a member of our team, please either make a Free Request For Call Back or call us directly on 01908 414990 and we will be pleased to help you.
investigations into Bounce Back Loan fraud https://www.altion-law.co.uk/investigations-into-bounce-back-loan-fraud-are-underway/