HMRC’s FIS hits bingo! A cause for celebration? – Harry Travers & John Binns write for The Legal Diary

HMRC’s FIS hits bingo! A cause for celebration? – Harry Travers & John Binns write for The Legal Diary

HMRC recently celebrated the achievement of its Fraud and Investigation Service (FIS) in recovering £218m in 2020-2021, taking its total haul during its five years of operation to over £1bn. But is this really something to be proud of? ask John Binns and Harry Travers.

Contributing factors

Any amount recovered may be good news for taxpayers, but it is also a product of three contributing factors.

The first is the amount of fraud committed – hard to know, but undoubtedly large and increasing. To help gauge the value of that figure, HMRC estimates 9% of the £61bn it paid out under the furlough scheme in 2020-2021 was the result of ‘fraud or error’.

Methods of recovery

The second factor is the methods available to recover the proceeds of fraud. There are several, with some significant ones added recently.

If convicted, a fraudster can be ordered to pay back the amount of benefit they obtained from crime, under the Proceeds of Crime Act 2002 (POCA). Since 2017, HMRC can also seek freezing and forfeiture orders under POCA against funds in bank accounts (and some other assets) that come from tax fraud.

Finally, HMRC has, and is using, ever more aggressively, powers to recover sums civilly, including by use of its Contractual Disclosure Facility (CDF). These civil routes are much easier for HMRC, which should increase its chances of recovering more sums, but come with risks of injustice for those who are wrongly suspected.

Targeting resources

The third contributing factor is the amount of effort and resource put in to recovering these sums.

Clearly, we would all want to see FIS deploying specialists to pursue the right cases in the right ways, including under POCA and the CDF, to recover monies from fraudsters.

Too often, though, we see instead that it pursues those it perceives as ‘easy’ targets, but where the merits are not made out. Before applauding the headline of £1bn recovered, we should ask query not only the real value of that figure, but whether HMRC’s efforts are targeted at the right people.

This article was originally published by The Legal Diary on 07/01/22. You can read the full version on The Legal Diary website.

Related articles