Covid-19: warning on scammers and abuse of government schemes
25 Mar 2020
The government's quick response to the covid-19 crisis could also be a drawback as ‘policies are going to be rough around the edges’ and possibly left open to exploitation by scammers and unscrupulous advisers and accountants
25 Mar 2020
The Coronavirus Job Retention Scheme (JRS), which will allow employers to furlough workers for 80% of pay up to £2,500 a month, could been seen as an area ripe for exploitation.
Heather Self, partner at Blick Rothenberg, said: ‘With the speed at which things are having to be developed, the policies are going to be rough around the edges initially.
‘We have already seen that with the Coronavirus Job Retention Scheme which has raised questions and we are expecting more guidance in due course.
‘We know that the Treasury and HMRC are working incredibly hard on this, with input from the professional bodies, who in turn are working collaboratively and stepping up to the plate to help the government.
‘But we have already seen lots of covid-19 scams going around, and inevitably, bad guys are going to try to take advantage of this situation.
‘The profession has a real responsibility to do all that we can to try to help HMRC make this work, and if we see bad behaviour, not hesitate to use HMRC’s fraud help line to report it.’
Self adds that if accountants and tax advisers spotted areas that were not working, they should offer constructive input rather than complaining.
When asked what protections were in place to prevent abuse of the Coronavirus Job Retention Scheme by unscrupulous companies and accountants, HMRC told Accountancy Daily: 'Government will retain the right to retrospectively audit all aspects of the scheme with scope to claw back fraudulent or erroneous claims.'
‘There is the potential for exploitation as things are moving so quickly,’ says Andrew Tate, a restructuring partner at Kreston Reeeves. ‘The rush to get announcement out means that less than scrupulous advisers could create schemes that take advantage of this.
‘The trouble is it is difficult to stop, because when people are desperate, people will do desperate things.’
Tate added that after the event he expects there will be a certain degree of scrutiny over the schemes, ‘but for the moment we are in unknown territory’, adding that the ethical guidelines set by professional bodies such as ICAEW, ACCA and CIOT will help prevent such abuse.
‘Covid-19 is such a serious issue, and there has already been criticism of companies that are profiteering from the crisis,’ he says.
John Cullinane, tax policy director at CIOT said: ‘There clearly is a risk because the normal anti-avoidance rules have not yet been put into the new measures,’ he says.
‘There has already been some debate around the Coronavirus Job Retention Scheme, where employers get the 80% pay for furloughed employees, when conventionally companies might have spread work around all employees, so there is an incentive to behave in a certain way.
‘There are of course the public health benefits of keeping some employees out of the workplace full time though.’
Tax advisers are being increasingly being asked for help by their clients that are looking at how schemes such as the Coronavirus Job Retention Scheme can help them, largely because it is a scheme administered by HMRC.
Code of ethics - Professional Code in Relation to Taxation (PCRT)
Advisers who are members of professional bodies such as CIOT and ICAEW are governed by ethical standards and the Professional Code in Relation to Taxation (PCRT) rules which were last updated in 2017, but this is only mandatory for members of the six leading accounting and tax bodies.
The PCRT is not set out in legislation as a statutory requirement, although it came nearer to moving on to the statute book in 2017.
Both the CIOT and ICAEW have long campaigned to make the titles of accountant and tax adviser a protected designation so that members of the public know when they are dealing with a qualified professional.
The latest PCRT came into effect on 1 March 2017, strengthening a number of measures from the earlier 2015 code.
The seven professional bodies signed up to the PCRT are:
- Chartered Institute of Taxation (CIOT);
- Association of Taxation Technicians (ATT);
- Association of Accounting Technicians (AAT);
- Association of Chartered Certified Accountants (ACCA);
- Institute of Chartered Accountants in England and Wales (ICAEW);
- Institute of Chartered Accountants of Scotland (ICAS); and
- Society of Trust and Estate Practitioners (STEP).
The revised Professional Conduct in Relation to Taxation (PCRT) effective 1 March 2017 is available here
One in three tax advisers unregulated by professional bodies [published May 2019]