21 July 2020: The first arrests have been made in relation to fraudulent abuse of two of the financial support schemes announced by the Government in the wake of the coronavirus pandemic.
A 57 year old made was arrested in Solihull on 8 July 2020 as part of an investigation into a suspected £495,000 fraud of the Coronavirus Job Retention Scheme (CJRS). Computers and other digital devices were seized and a bank account was frozen. The man was also arrested in relation to a suspected multi-million pound tax fraud and alleged money laundering offences. HMRC said it had received more than 4,400 reports of suspected fraud linked to the CJRS up until the end of June, more than 800 of which it had received within a month of the start of the furlough scheme.
It was then reported on 10 July 2020 that two men were arrested in North London in connection with fraudulent applications to the Bounce Back Loan Scheme (BBLS). The alleged fraud came to light when police investigating a separate offence searched a vehicle and found documents believed to be related to applications for loans on behalf of fake companies. In addition to the arrests, the police also obtained ten bank account freezing orders which held funds in excess of £550,000. Nearly £35 billion in loans has been issued to 830,000 small and medium sized businesses under the BBLS.
Almost as soon as the CJRS and BBLS were announced, concerns were raised about potential loss to the public purse as a result of fraud. One of the suggestions made was to publish the names of businesses that have availed of the financial support in the belief that this would deter fraudsters and lead to greater accountability. The Treasury responded to the concerns by saying that the schemes provided a lifeline to small businesses through the crisis and that any applications that were fraudulent would be criminally prosecuted.
We do not yet know how all of the financial support provided during the pandemic will be repaid. In the case of the BBLS, the loans are all guaranteed by the taxpayer, so it is hoped that where cases of fraud are identified those responsible are dealt with to the fullest extent of the law.