Furlough Fraud
The government introduced a number of schemes to protect individuals and businesses due to restrictions resulting from COVID-19. The most widely used and expensive scheme was the Job Retention Scheme and placing staff on furlough.
This allowed an employer to keep an employee on the payroll even if they have had no or, since 1 July, limited work to do because of COVID-19. The scheme has been extended again to cover the forthcoming November lockdown.
Exploitation
There are rumours circulating that as much as £3.5 billion has been paid out in wrong or fraudulent claims.
HMRC will use, the recently introduced under the Finance Act 2020 to seek enforcement of breaches.
What may constitute furlough fraud?
Examples of “furlough fraud” can include:
Where furloughed employees are asked to do “a little bit of work on the side”.
Claims that have been made for individuals who no longer work for the company.
Failure to comply with the rules to provide enhancements to staff on maternity leave or sickness absence.
Unbelievably, employers are also known to have claimed furlough payments, without passing on the monies to the employee.
Backdating of claims.
What criminal offences cover furlough fraud?
Fraud by false representation
False accounting.
Conspiracy to defraud.
Cheating the public revenue.
Money laundering.
What if you have inadvertently claimed?
If you have made an error, you must notify HMRC within 90 days after the date you received the grant or 90 days after your circumstances changed resulting in you no longer being entitled to keep the grant.
Failure to notify:
HMRC can recover in full the over–claimed amount by way of a tax assessment, which has to be repaid within 30 days. HMRC may also charge you a penalty of up to 100% of the amount of the CJRS wrongly received as a punishment.
Criminal investigations
HMRC has stated that its priority is to tackle deliberate non-compliance and criminal attacks on the system. Arrest warrants have already been issued.
Posted on 11/04/2020 by Ortolan
