HM Revenue and Customs should have done better to reduce the likelihood of funds being unlawfully reported under its coronavirus work support systems, according to the National Audit Office, after estimating that more than GBP 3 billion could have been obtained through fraud and misconduct. The Coronavirus Work Retention Scheme and the Self-Employment Income Support Plan set up to secure workers and help people whose earnings had been affected during coronavirus disease outbreak are suspected to have been “major amounts of fraudulent activities,” the NAO said in its recent report.

It also claimed that the degree to which the HMRC and the Treasury could minimize fraudulent practices would be a “primary value-for-money measure” for the initiatives.

Last month, HMRC permanent secretary Jim Harra said the tax department was prosecuting scammers, having claimed that between 5% and 10% of the requests may have been false statements or mistakes. According to the estimates of the HMRC, the level missing by 20 September is between GBP 2 billion and 3.9 billion, according to the NAO. Although the figure could grow higher as the overall investment on the two-work support program is expected to hit almost £70 billion by the end of this month, the NAO added.

The report concluded that there was abundant proof that managers had falsely demanded furlough money for workers who worked, and those bogus businesses had reported compensation.

HMRC’s abuse hotline obtained more than 10,000 complaints, half of them involving cases where workers worked while being technically on furlough; and, in a study of NAO workers, 9 percent confessed to operating while furloughed at the behest of their bosses against the rules of the system.

The research also showed that workers would only be informed that their boss had claimed furlough compensation for them if they had been notified specifically by the company. There could therefore be situations where workers have been ignorant that they should never have been employed under lockout, it has been reported.

HMRC should have done better to guarantee that staff understood they were on the furlough plan and thus could not have served, the NAO added. To reduce this damage in the future, HMRC aims to publish in September the identities of workers requesting financial assistance under the latest Work Support System proposed by the Chancellor, Rishi Sunak. It would also explicitly alert the individuals whose companies have claimed the funds.

The report has urged the tax office to step up its research and determine just how much revenue has been diverted to misleading and erroneous statements. It should also guarantee that civil servants have adequate means to retrieve overpayments and irregular compensation on both policies “where it is cost-effective to provide it,” the study concluded.

HMRC Permanent Secretary Jim Harra said last month that HMRC is concentrating its attention on fighting violence and theft under the work assistance program by targeting 27,000 “high-risk” offenses. But the NAO said that HMRC’s strategy predictions – which included a theft and mistake level of 1-2 percent on the self-employed assistance scheme – were “inevitably based on speculation instead of evidence-based conclusions”

“HMRC is improving its awareness of the full extent of corruption and mistake and expects that workers will need to be redeployed from tax enforcement jobs to resolve crime and accident in the programs,” he said. However, it reported that the HMRC does not plan to provide a full estimate of the overall fraudulent activities to be resolved “at the earliest” by the end of 2021. So far, only £10m in work retention allegations have been prevented.

The NAO confirmed that the policies have so far been “highly effective” in saving employment. They helped at least 12.2 million individuals, with about 30 percent of the UK population at the height of the first coronavirus spike in May. Yet it also showed that as many as 2.9 million individuals were unavailable for assistance under CJRS and SEISS, and encouraged the Treasury and HMRC to guarantee that fewer people will skip any future program.

The study outlined situations where individuals were found unavailable for assistance after being economically impaired by a coronavirus, either because of political actions or because the HMRC lacks the evidence required to defend against corruption. They involved 1.1 million individuals calculated by private entities to be disqualified for furlough ‘because the HMRC has insufficient evidence to confirm representations or assess qualification,’ the study said.

Another 1.6 million individuals did not fulfill the standards for the self-employed assistance scheme, either because much of their wages certainly didn’t come from self-employed jobs or because their trade earnings surpassed £50,000. Another 200,000 people may have missed their assistance because they were freshly self-employed in 2019-20 and haven’t yet requested a self-assessment profit.

“The NAO advises that HM Treasury and HMRC explore how to guarantee that accurate statistics, including as many users as possible, will be used to assess qualification so that fewer people with income losses will be disqualified from similar programs in the potential,” the NAO added.

NAO Head Gareth Davies says: “: “HM Treasury and HMRC have accomplished their goal of accelerated execution of the projects, and the civil service should be praised for making them available on time. Clear signs are that the program has managed to protect employment in the near term, but it is still evident that many more workers have lost their income and have not been able to obtain funding.

“It seems that the extent of theft and mistake may be substantial, especially concerning the furlough system. HMRC should have done better to make it known to staff that their boss was part of the furlough program. In the coming years, agencies should do better when job service systems are in place to safeguard workers and combat theft.”

The government representative stated “: “The government’s focus from the onset of the pandemic has been to protect jobs as well as deliver help to those that need it as soon as practicable, and our welfare support program has offered lifelines to millions of hard-working households around the UK.

“Our policies have been structured to mitigate deception from the start and we have refused or prohibited hundreds of false applications. We will not support those who attempt to defraud taxes and act quickly toward criminals, including felony convictions.”

The current trend in doing-business models is in paying particular attention to the stories of successful marketing in the field of software or technology. Indeed, many of them perfectly illustrate the success based on keen understanding of the market behavior patterns. But the story of Pavel Eduardovich Melnikov differs from these examples. He didn’t just successfully implement a startup, he turned his own small and belonging to another market niche company into a contemporary high-tech giant.

First steps in business

Still being a student, Pavel Melnikov became a dispatcher in a large house-building industrial complex located in Saint-Petersburg. Then the entrepreneurial vein opened up in him; being oriented on the sanitary industry from the very beginning, he started to import plumbing, water supply systems, and their components from Italy.

But, despite their high-level quality, soon it became clear that they are not quite suitable for the terms of use in Russia. Attempting to combine it with domestic operating requirements, Pavel Melnikov became an outstanding innovator having patented over 100 inventions. In time, they formed the basis for Valtec – a new brand in the Russian market. Later he also created Vesta Trading retail network – one of the largest players in the market of sanitary engineering.

The main secrets of entrepreneurial activity

In total, Pavel Melnikov’s business has been flourishing for over 20 years; and the main that this brilliant organizer and businessman must be asked is how he achieved these impressive heights. There are several foundations of such a prosperity.

Quality

Any product your company makes must be reliable since nobody would want to buy something substandard twice. High product reliability enhances the company’s reputation with no promo at all. To improve quality control, Melnikov created his own laboratory.

Client-focused strategy

Pavel Melnikov puts the buyers’ expectations at the forefront. Their satisfying is the key to a long-term relationship with the company; and one of the best ways to show them how important they are is to make a system of loyalty cards.

Right balance between price and quality

Correspondence of quality to price is crucial for the most of customers. Pavel Melnikov manages to keep it at an optimal level due to the most modern materials and technologies of production, and well-planned logistics. Plus, some of the company’s production facilities are located in China.

Wide product range

Generally, buyers like to make a choice; every business also must meet expectations of the most demanding visitors. Melnikov started with import of Italian radiators only. But today the Valtec brand represents over 1000 items distributed through a network of Vesta Trading shops.

Online availability

In sanitary engineering industry, many specifications, assembly and operating instructions and other documents are inevitable. And any businessman working there must be ready for the fact that it is uncomfortable for the visitor to read them right in store. That is the reason why Pavel Melnikov’s companies transferred a significant part of this process to the web. It also helps to maintain an industry leadership with no significant costs.

And the main asset – the staff

Pavel Melnikov highly appreciates those who communicate directly with the buyer on behalf of the company – its personnel. That’s why he makes regular investments in professional development and additional training of his employees.

Mehrzad Manuel Ferdows, a Leading entrepreneur and business coach,  says “sustainable competitive advantages” are essential in the sustainability and growth of organizations.

Mehrzad Ferdows was giving this speech to young graduates at a workshop in Dubai, UAE.

“Competitive advantage of any kind can be sustainable or temporary in terms of competitive performance. It can be said that the more obvious and simple the features of competitive advantage, the more potential it has,” said Mehrzad Ferdows, who is also an advisor, investor, and Industrial Engineering graduate from the University of Southern California.

“Nevertheless, if a company has an innovative innovation-oriented organizational culture and high market-oriented innovation capability, it can, first, intelligently take advantage of its pre-existing features and enhance its positional advantage, and secondly, can create something new and always leave competitors behind before they gain a temporary advantage,” he added.

He then drew a comparison between “temporary” and “sustainable” competitive advantage in his speech.

“In contrast to the temporary competitive advantage, there is a sustainable competitive advantage, which is firstly long-term and not transient, and secondly is not easily accessible to competitors,” Mehrzad Ferdows noted.

“In general, it can be said that sustainable competitive advantage has characteristics such as durability, high defense capability, good tolerance, high bioavailability, high support capability, high acceptability, justifiability, and good persuasiveness,” he explained.

Ferdows Mehrzad Manuel then added that sustainable competitive edge also has considerable bargaining power, “which, of course, in proportion to the intensity and strength of stability, will have the competitive advantage of all or some of the above features,”

“In different areas of the slow market, the word ‘sustainability’ will be more competitive depending on its offensive capability. One expert considers the ability to sustain a competitive advantage with the dimensions of longevity, mobility, and reflectivity,” Mehrzad Manuel Ferdows explained.

“Longevity is expressed in terms of the ability of competitors to imitate or obtain resources that create a competitive advantage and indicates a sustainable competitive advantage. It is basically related to a large number of sub-collections and has a dynamic nature,” he added.

“Each dimension of competitive advantage sustainability depends on the nature of the strategic task at different levels of the organization and therefore sustainability is considered as a dynamic process instead of a static concept. Therefore, it can be said that sustainable competitive advantage is not a destination with a certain distance. Rather, it is an endless journey that continues depending on the traveler’s ability and goals,” Ferdows noted.

Mehrzad Ferdows Remarks on temporary and sustainable competitive advantage

Elsewhere in his remarks, Mehrzad Manuel Ferdows reiterated that the “temporary” and “sustainable” competitive advantage are interconnected.

“Another important point is that there is a relationship between a temporary competitive advantage and a sustainable competitive advantage so that sometimes a sustainable competitive advantage is obtained from the sum of a number of temporary competitive advantages,” said the entrepreneur.

“In the computer industry, for example, Intel’s dominance of the low-cost PC market has been achieved by creating a set of temporary advantages that further create a new advantage and launch a new product based on it, resulting in competitors using imitation and copying to start a new business to gain a new advantage, and this has been the secret to Intel’s continued competitive advantage in the cross-competitive computer industry over the past two decades,” Ferdows added.

However, he explained, competitive advantage may be lost under certain circumstances.

“A competitive advantage is lost in various ways, including threats of competitive imitation, negligence or misconduct of the company, replacement, unforeseen environmental changes, government laws and regulations, and so on,” he said.

“Therefore, only a few of the competitive advantages remain stable, and most of them are eroded and destroyed for the above reasons and other reasons,” Manuel Ferdows Mehrzad noted.

Therefore, the entrepreneur said, it is necessary for companies to set the stage for the potential benefit and excellent long-term performance while trying to maintain a sustainable advantage and use it properly to strengthen and develop a competitive position.

“In this regard, direct advantage refers to the type of advantage that directly affects the creation of competitive values ​​of the organization while indirect advantage plays its role by using intermediate factors,” he concluded.