Fighting Furlough Fraud

The end of March was less than three months ago but feels more like a year.


HMRC getting ready to fight furlough fraud

When the coronavirus lockdown was formally announced, there was a flurry of activity for companies trying to sort their staffing and business operations out before having to forcibly close their doors.

 

The various support schemes were announced and finessed and businesses had to do their very best to keep their heads above water in the meantime.

 

During this hectic time, while the rules and financing for the various arrangements were in their infancy, it would have been easy to accidentally contravene them.  It would also have been an opportunity for some companies to look for an unfair and illegal advantage of keeping employees working while receiving furlough money for them.

 

But these practices are coming to a swift end.

 

HMRC has been aware of allegations of impropriety and has already received more than 3,000 reports from employees that believe they’ve been asked to work illegally while on furlough for a company or that their company has been claiming money on their behalf without their prior knowledge.

 

Recent research showed that 34% of furloughed employees had been asked to continue doing their job and another 29% were told they had to undertake more administrative tasks instead.

 

Another 20% had been asked to cover another employees job within the company or work for another company linked to their employer.

 

Draft legislation is currently proceeding through parliament which will form part of The Finance Bill 2020 will give companies a 30-day period to admit any inadvertent infractions made contrary to the regulations of the Coronavirus Job Retention Scheme or the Self Employment Income Support Scheme.

 

After this opportunity expires then HMRC will use both criminal and civil powers to pursue claimants who broke the rules and will likely make one or two high-profile examples to illustrate how seriously they are taking their duties.

 

The draft legislation also includes the powers to pursue company office holders even if the business later becomes insolvent with joint and several liability.

 

The legislation is being written to target those that in the view of HMRC have deliberately set out to mislead and take advantage of the schemes so if you’re aware of any mistakes or irregularities with your own filling then now would be the right time to clear these up before HMRC start taking a closer interest in your business affairs.

 

These are not derisory sums involved. As of June 7th some £20 billion has been paid out to over a million companies in furlough claims while an additional £7.5 billion has been paid to the 2.6 million SEISS claimants.

 

Business owners and directors should make sure that all their documentation is accurate, that government guidelines were adhered to and that the amounts claimed were correct.  Of course they should also make sure that furloughed staff have not been working for the company during the subsequent period.

 

A spokesperson for HMRC said: “This is taxpayer’s money and fraudulent claims limit our ability to support people and deprive public services of essential funding.

“Claims are checked and payment may be withheld or need to be repaid if the claim is based on dishonest or inaccurate information. We won’t hesitate to take criminal action against the most serious cases.”

 

Furloughed workers can begin to return to work on a part-time basis starting from July 1st while the percentage of wages paid by government and directly subsidised by employers begins in September and increases in October until the scheme is scheduled to wind-up on Halloween.

 

The next few months might not be the end of the disruption caused by the coronavirus but it might be the end of the beginning.

 

There hasn’t been a business quarter like this in living memory and it’s unlikely that things will get back to anything approaching normal for quite some time to come.

 

As the government’s COVID-19 support systems are wound down and withdrawn, many businesses still aren’t in a position to operate at full capacity or respond to customers as quickly and efficiently as they’d like.

 

If you’ve got any questions about the future of your business not only about its survival but also about what changes you need to make to give yourself the best chance of reemerging in the best possible shape then get in touch with us.

 

One of our expert team of advisors will arrange a free virtual initial consultation with you then once they have a clearer and firmer understanding of your circumstances, be able to work with you on a plan to reach the goals and targets your company needs to meet.

 

Then you can concentrate all your energy on getting back to business – as normal or as close to normal as we’ll get.

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