Covid fraud squad given powers to search properties
Sara White, Editor, Business & Accountancy Daily
Chancellor expands Covid enforcement team’s powers to search properties, seize assets, and recover money directly from bank accounts and pay checks
The move comes as the government confirmed nearly 2,000 company directors have been banned and 86 bounce back loan fraudsters have been prosecuted, albeit less than half of these have been jailed. However, only £1.8bn of stolen covid funds have been recovered with over £8bn in total still missing through fraud and error.
The Public Authorities Fraud Investigation and Enforcement Service (PAFIES) will be given extra powers and from this autumn will begin pursuing suspected fraudsters, armed with the strongest investigatory tools in a generation, said chancellor Rachel Reeves.
New powers will give investigators the ability to search the premises of suspected fraudsters and seize money directly from fraudsters’ bank accounts if they do not pay back what they owe.
In addition, the limitation period to pursue bounce back loan and all covid fraudsters has doubled from six to 12 years, using powers in the Public Authorities (Fraud, Error and Recovery) Act 2025 (PAFER Act), which received Royal Assent last December.
The Act will also give enforcement team new tools to tackle fraud, including enhanced investigation, search-and-seizure, and information-gathering powers, with the authority to compel information from third parties. There will also be civil financial penalties to accelerate enforcement.
Chancellor Rachel Reeves said: ‘We have taken action to protect £7.5bn of public money. My message to those who owe the public purse money is clear – those who profited, will pay.’
The crackdown was the key plank of the government’s response to the Covid Counter Fraud Commissioner’s final report, which flagged the unacceptable scale of pandemic fraud. A total of £10.9bn was lost to fraud and error, as a result of lax checks on loans and the ready availability of support during the pandemic, particularly from bounce back loans and furlough, which were widely abused.
Powers from the PAFER Act 2025 extended the limitation period for civil claims relating to Covid fraud against public authorities from six years to twelve, meaning that suspected fraudsters can be pursued until 2032.
A voluntary repayment scheme closed on 31 December 2025 and the government reversed the previous administration’s plan to wind down anti Covid fraud investigations.
A Covid fraud reporting website, set up last September, has received over 1,000 reports of suspected fraud.
