Furlough Fraud

The HMRC are preparing to tackle fraudulent and erroneous claims made to the Coronavirus Job Retention Scheme but are first asking claimants to confess to any misuse by providing a 30-day window of opportunity.

Employers that believe they may have abused the Coronavirus Job Retention Scheme will have a 30-day period to admit their mistakes under plans being fast-tracked through Parliament.

Draft legislation is being rushed through Parliament and is expected to become law in early July as part of the Finance Bill 2020.

Almost £20bn was paid out to more than one million employers in furlough claims as of 7 June 2020.

The legislation is expected to introduce a 30-day window of opportunity to ‘confess’ and notify HMRC of any mistakes. After this HMRC will pursue incorrect claimants using both criminal and civil powers. For business owners, many of whom may have implemented claims in a rush at the start of lockdown, now is the time to go back and check and double-check the amounts are right; making sure the paperwork is accurate, and government guidelines are adhered to.

As of 29 May, HMRC had received 1,868 reports of fraud.

Why would employers be tempted to abuse the scheme? 

Known abuses that have been cited are claiming on an employees’ behalf without their knowledge, or by expecting employees who have been furloughed to continue working.

Each employer was required to discuss and inform their employee that they were being furloughed so should have sent letters to confirm the furlough. Employers need to ensure they have all the correct paperwork in place in case they are investigated.

Employees could not work whilst on furlough and employers asking their employees to work, maybe not full-time but to help out whilst on furlough should not have received furlough pay. In these cases, the employees were working so furlough pay could not be claimed and the employer should pay them as normal.

 It is important employers understand the potential consequences of knowingly making a fraudulent claim. For those where HMRC suspects fraud then expect an investigation

The draft legislation includes powers to pursue company officeholders where businesses become insolvent, with joint and several liabilities.

Justine Brown, CEO and Founder of Just Global HR Services Limited

Telephone: +44 1628 244090

Email: justine.brown@justglobalhr.com

Website: www.justglobalhr.com