July 16, 2020

A Furlough fraud warning

This post was written by: Ilinca Mardarescu

The Furlough scheme has been a life-line for both businesses and employees alike during lockdown.  Sadly however, there are those that have tried to take advantage.

The CJRS has changed in scope a few times over the past few months.  We are currently at the stage where employees are allowed to work part-time and also be on Furlough part-time, if that is what the business requires.  This was not always the case however when Furlough was introduced.  At the start of the scheme, any employees on Furlough were categorically not allowed to work for their own employer.  Indeed, even now HMRC is clear that employees who work part-time and are on Furlough part-time must not carry out any work on the days they are Furloughed.

The reason is simple.  HMRC has confirmed that more than £27.4bn has been claimed through the CJRS.  But, this money is taxpayer’s money and HMRC has also confirmed, in no uncertain terms, that it will be investigating any allegations of fraud in relation to the CJRS.  Indeed, HMRC have set up a hotline to report fraud and it says it has received more than 4,400 reports of suspected fraud linked to the scheme up until the end of June.

The much-publicised recent arrest of a Solihull man in relation to CJRS fraud should also make employers think twice.  Computers and other digital devices were seized, and funds held in a bank account relating to his business have been frozen.

A further eight men from across the West Midlands have been arrested as part of a linked investigation, which involved the deployment of more than 100 HMRC officers to 11 locations. Further computers and other digital devices have been seized here as well as business and personal records.

This is a clear indication by HMRC that they will be looking at any suspected cases and following up any “tip-offs” they may receive.

The government is fully aware of this issue and have given employers a grace-period to get their house in order.  The Finance Bill (will receive Royal Assent later this month) will trigger the start of the 90 day period for businesses to notify HMRC that they received furlough scheme payments which they were not entitled to receive or retain.  Mistakes may happen when processing but clearly now is the time to revisit this issue and make sure any payments received where lawful and in accordance with the scheme rules. 

For any assistance with this or any other employment-related query, please do not hesitate to contact our Head of Employment, Ilinca Mardarescu.