Furlough Fraud crackdown begins

The Coronavirus Job Retention Scheme (CJRS) has been a lifeline for thousands of businesses and employees.


The crackdown on Furlough Fraud has begun

Furlough fraud

 

Over nine million jobs had been furloughed over six months covering 1.2 million employers. The total value of claims made through the scheme has reached £33.8 billion. 

 

But as employers are now paying pension and national insurance contributions and from September 1st a proportion of wages, more workers are expected to be returning to work by the end of the month. 

 

HMRC are also going to begin taking a closer look at the conduct of some companies since lockdown began in March as they increase their investigations into misuse of the scheme or ‘furlough fraud’. 

 

From July 1st up to and including July 22nd, HMRC received 6,749 reports of ‘furlough fraud’ compared to 4,400 reports in the whole of June – a rise of 53% in three weeks. 

 

A spokesperson for HMRC said: “The scheme was part of a collective national effort to protect jobs and we take any claims of fraud related to it seriously. 

 

“We’d ask anyone concerned their employer might be abusing the scheme to please contact us.”

 

Examples of ‘furlough fraud’ given include:

 

  • Not paying workers what they’re legally entitled to
  • Asking employees to work while they’ve been furloughed
  • Claiming furlough pay for when they were actually working

 

There is also the possibility that some companies had inadvertently been breaking furlough rules due to the rush to get approved by the scheme and help save jobs and ultimately the business. 

 

A poll of 2,000 furloughed employees carried out by People Management found that over a third (34%) had been asked by their employer to commit furlough fraud by carrying out their normal duties despite the business claiming CJRS funds. 

 

A further 18% said they’d been asked to work for another company linked to their employer while 19% said they’d been asked to cover someone else’s job within their organisation. 

 

A 57-year-old man was arrested in the West Midlands on July 8th as part of an HMRC investigation into a £495,000 CJRS fraud – the first arrest of its kind this year. 

 

A further eight men have also been arrested in connection with the case on suspicion of cheating the public revenue, fraud by false representation, VAT evasion and money laundering. 

 

Working out furlough pay is complicated in itself. Employers have had to work out how many hours each employee usually works and deduct this from the number of hours they’ve been furloughed. 

 

Employment specialists recommend that businesses should undertake internal CJRS audits now to discover any rule breaches before HMRC look themselves. 

 

If they discover any they can correct them and show that reasonable steps were taken at all stages to ensure compliance with the scheme. This could mitigate any potential penalty to be imposed under the Finance Act 2020 which could rise to up to 100% of the Income Tax charge.

 

HMRC are the most prolific creditors in the UK and one of the most active in chasing payment for outstanding debts. 

 

Avoiding or ignoring HMRC is not only guaranteed not to work but will also annoy the very people you really don’t want to annoy.  

 

If you owe them or think you might have accidentally and innocently contravened any of CJRS’s rules then you should get in touch with us

 

We helped hundreds of clients with their outstanding HMRC issues and helped them come to a satisfactory solution and eventual conclusion. We’d love for you to be one too.  

 

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