Gangsters to get away with stealing billions of pounds of furlough money 

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 (HMRC) would need to double its workforce in order to tackle the problem.

Last month the National Audit Office (NAO) revealed that as much as five percent of the total funds awarded to help bail out businesses had been siphoned off by gangsters and con men.

It is feared that a large portion of the money will have already been spent or invested in other criminal enterprises such as prostitution and drug running.

Organised crime groups, including some based overseas, are thought to have targeted the furlough and bounce back loans schemes, using sophisticated cover stories to fraudulently claim taxpayers’ cash.

The Chancellor’s bailout packages were seen as an easy, low-risk cash bonanza by criminal gangs, whose traditional revenue streams had been badly hit during the lockdown.

The Government is using its dedicated tax enforcement teams to investigate the frauds, but has so far arrested just a handful of people.

Officials estimate it would take at least 500 staff to track down £275 million that was handed out through 10,000 of the most high-risk furlough grants.

But such is the scale of the overall problem that experts believe HMRC has got little chance of recovering the vast amount of missing taxpayers’ cash.

Analysis carried out by the legal services firm, Integrated Dispute Resolution (IDR), estimates HMRC would need to double its entire workforce in order to make any impact on the losses.

Tax expert at IDR, Kevin Humphreys, said: “HMRC would need 54,500 staff to claw the coronavirus losses back, broadly speaking, its entire UK workforce.

“That is clearly not possible, and even if they had the resources HMRC also needs to be realistic about the prospect of recovering money from coronavirus fraud. 

“The bounce back loans will have been spent and the borrowers may not have easily identifiable personal assets to target. They may have even transferred the funds offshore.”

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

Furlough uptake by industry

Meanwhile, accountancy giant Blick Rothenberg has warned the owners of small businesses that have claimed under the furlough scheme that they could face extra scrutiny over their tax affairs.

In an email to its clients it warns them to be prepared for “random or selective” investigations as HMRC tightens up the multi-billion pound tax gap – the difference between what is owed and and what is actually paid. 

The email states: “If you have a business that has furloughed staff, you are more likely to have an HMRC investigation than a business that has not claimed under the Coronavirus Job Retention Scheme.”

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