Furlough Fraud – Reports on the Coronavirus Job Retention Scheme

Last week it was announced that nearly 800 cases had occurred of reported Furlough Fraud. Examples of Furlough fraud could be:

1. Where employers are claiming furlough payments for employees and actually still allowing them to work, 
2. Where employers are claiming the furlough fund when the employee is not aware that they are furloughed. 
3. Where fictitious employees are created by employers to enable a claim to be made to HMRC.

Personnel Today magazine reported that employees contacted whistleblowing organisations and HM Revenue and Customs, informing them of the situation. 

The Coronavirus Job Retention Scheme is currently supporting 8 million workers in the UK, as employers endeavour to keep businesses solvent for when life returns to normal. Government and HMRC have stipulated that businesses can only claim on this scheme for workers they have furloughed, and the furloughed employees cannot conduct any work for the business whilst the grant is being claimed.

Audits will be carried out by HMRC and any business that flouts these guidelines is likely to be investigated by HMRC, and it is likely that employers could have to repay any amount wrongly claimed. Additional civil penalties could be applied by HMRC. 

Up to 80% of employee salaries can be claimed through the Coronavirus Job Retention Scheme, and businesses are expected to act in good faith with claims.

Head of Fraud at Cartwright King, Sundeep Soor states: “Any government scheme is open to abuse. There is a risk to employers and organisations who have flouted the law that HMRC could consider criminal prosecution for any abuse of the Coronavirus Job Retention Scheme and other schemes.  Such offences can result in strict financial penalties being imposed and in some cases imprisonment”.   

Cartwright King has lawyers in most areas of law, and the current information we are sharing is written by Head of Tax and Fraud Sundeep Soor at Cartwright King. 

If you have any further queries around the above topic or otherwise, contact the firm here.