A 57-year-old businessman from the West Midlands has become the first person to be arrested for an alleged £495,000 fraud of the UK government’s coronavirus job retention scheme.
HM Revenue & Customs said the man from Solihull was detained on Wednesday on suspicion of “cheating the public revenue, fraud by false representation, VAT evasion and money laundering.”
As part of the arrest, officers seized computers and other digital devices and froze funds held in a bank account relating to the suspect’s business, the tax authority said.
Richard Las, acting director, Fraud Investigation Service, at HMRC, said: “The vast majority of employers will have used the [job retention scheme] responsibly, but we will not hesitate to act on reports of abuse of the scheme.”
“This is taxpayer’s money and any claim that proves to be fraudulent limits our ability to support people and deprives public services of essential funding.”
Since it was launched, more than £27.4bn has been claimed through the scheme, which has helped support 9.4m furloughed workers across 1.1m companies.
Officials have previously acknowledged that the vast sums of money being handed out through the scheme would make it a target for fraudsters.
In April, Jim Harra, permanent secretary and chief executive at HMRC, said there was a risk organised crime could target the scheme as it had been designed “at pace”.
However, he added that several measures had been put in place to prevent fraud. For example, claims would only be accepted from employers known to HMRC and these would be vetted by specialist staff. In addition, only employees on the payroll before March 19 were eligible.
But Jessica Parker, partner at law firm Corker Binning, said despite those measures speculation was mounting that fraudsters had targeted the scheme on a large scale.
“Through this action HMRC are sending a clear message to those who are tempted to take advantage,” she said, adding: “It is likely that this action will be followed by a publicised amnesty for those who may have claimed furlough payments fraudulently and HMRC will expect that today’s arrest will encourage those who otherwise may have ‘waited it out’ to come forwards.”
HMRC said the 57-year-old man was also arrested in relation to a suspected multimillion pound tax fraud and alleged money laundering offences.
A further eight men from across the region have also been detained in raids as part of the wider investigation, the HMRC said.