Illicit funds confiscated by HMRC increase sevenfold to £39m
Account freezing and forfeiture orders being used against furlough fraudsters
HMRC confiscated assets worth £39million in the last 11 months through Account Forfeiture Orders, a 712% increase from £4.8m the previous year*, says international law firm RPC.
RPC says HMRC is targeting those suspected of fraud in relation to furlough and other Covid related government support schemes with Account Freezing Orders and Account Forfeiture Orders.
HMRC admitted last year that as much as £5.8billion has been lost to fraud and error in connection with the various Covid economic support schemes.
Adam Craggs, Partner and Head of Contentious Tax and Financial Crime at RPC, says the increase in assets forfeited shows that HMRC is cracking down hard on suspected fraud.
Craggs says: “The relative ease with which UK law enforcement bodies can seek and obtain an Account Freezing Order or an Account Forfeiture Order, means that they are being used more by HMRC. The threshold for obtaining an Account Freezing Order is suspicion based and therefore low – there is no need for there to have been an associated criminal conviction or even an investigation."
"The sharp rise in assets forfeited in the last year suggests that HMRC consider these orders to be the 'go-to' option when seeking to deprive someone suspected of wrong-doing of their ill-gotten gains"?
Account Freezing Orders and Account Forfeiture Orders are deployed where there is a reasonable suspicion funds were gained through criminal conduct.
Alice Kemp, Senior Associate at RPC, says: “Given the success HMRC is now seeing with Account Forfeiture Orders, it is likely that they will be used more and more.
"An Account Forfeiture Order can be challenged by any affected person. It is possible to either resist an application or to have an Order set aside or varied.
"It is important that any affected person seeks appropriate expert legal advice as soon as possible to minimise the disruption from having funds frozen.”
RPC adds that HMRC is willing to use Account Freezing Orders and Account Forfeiture Orders in a far wider range of cases than might be expected. Beyond abuse of Covid support schemes, RPC says Orders can be sought in the context of company directors suspected of falsifying company records and accounts.
They may also be sought where HMRC suspect that a claim for Principle Private Residence relief has been made fraudulently.
Alice Kemp adds: “HMRC has shown a real willingness to freeze and forfeit the assets of individuals they suspect of fraud. These measures are by no means reserved for organised criminal gangs.”
Amount seized by HMRC through Account Forfeiture Notices (£GBP)
*Comparing previous year (ending March 31 2021) to current year 11th February 2022