In England and Wales, the penalties for furlough fraud vary depending on the severity of the offence. If an individual or company is found guilty of furlough fraud, they may be required to pay back the money they wrongfully claimed, plus interest. They may also face fines and penalties, and in some cases, they may be prosecuted and face criminal charges.
The penalties for furlough fraud can be severe, and can include imprisonment for up to 10 years in the most serious cases. Additionally, those found guilty of furlough fraud may be subject to Director Disqualification proceedings, which can have long-lasting consequences on their personal and professional life.
Here, we explore the penalties for furlough fraud in more detail, helping you understand the possible consequences for you and your company.
Furlough Fraud Penalties
The penalties for furlough fraud depend on whether HMRC decides to pursue civil or criminal proceedings against you. Most cases will involve civil proceedings; this is more cost-effective for HMRC, as it allows funds to be recovered without the time and expense of a criminal case. Criminal proceedings have a higher standard of proof, meaning it can be harder for HMRC to secure a conviction, with court proceedings often taking many months (or even years) to conclude. However, HMRC will pursue criminal proceedings in the most serious of cases, particularly those involving deliberate dishonesty, organised crime, and significant sums of money.
Civil Penalties for Furlough Fraud
The civil penalties for fraud include:
- A requirement to repay funds that were wrongfully claimed, plus interest
At the very least, HMRC will require you to pay the funds that were wrongfully claimed under the furlough scheme. This might be all or some of the money that was paid to your company. Interest is typically added.
- Financial Penalties
On top of this, you may also incur financial penalties, including a civil fine and costs. This is more likely if you realised that you overclaimed, but you failed to tell HMRC about it.
- Director Disqualification
If you are (or were) the director of a company that overclaimed under the furlough scheme, you may be subject to director disqualification proceedings. HMRC will say that you failed to meet your fiduciary duties, making you ‘unfit’ to act as a company director. Director disqualifications can last for between two and 15 years.
Find out more about Company Director Disqualification.
Criminal Penalties for Furlough Fraud
The criminal penalties for furlough fraud include:
- An unlimited fine
Furlough fraud amounts to ‘fraud by false representation’. In England and Wales, this carries various penalties, including an unlimited fine. A sentencing judge will decide the amount based on the seriousness of the offence and your relevant weekly income.
Fraud by false representation also carries up to 10 years’ imprisonment. Very few people receive the maximum sentence. However, jail time is a very real possibility for those who are found guilty of furlough fraud, especially where it is linked to organised crime or extension deception.
- Costs and other penalties
Those who are found guilty by a criminal court can also expect to face costs and other financial penalties, such as HMRC’s prosecution costs and a compensation order.
In addition to the furlough fraud penalties outlined above, your company is likely to incur reputational damage. This is harder to quantify but can mean serious harm to your bottom line and the viability of your business going forward.
Mitigating the risk of Furlough Fraud Penalties
If you have been accused of furlough fraud, you will no doubt be concerned about the potential penalties for you on a personal and organisational level. In situations such as these, action is better than inaction. Being deliberately evasive can mean harsher penalties than would otherwise be expected, even if this evasion stems from fear or uncertainty as to the best way forward.
Because of this, we highly recommend that you contact our solicitors as soon as you are linked to furlough fraud. Most people will receive a letter of concern through the post, but others will be invited for interviews under caution or even subject to dawn raids. Whatever the case may be, our experienced solicitors can determine the best strategy to mitigate the risk to you and your company. Is it vital to take this course of action, regardless of whether you have been wrongfully accused, you have made an honest mistake, or you have deliberately claimed more than you are entitled to under the furlough scheme.
Contact us now
We understand the implications of furlough fraud penalties and will apply our extensive expertise to get you the best possible outcome. This might involve establishing your total innocence, limiting the penalties that are incurred, or negotiating civil rather than criminal proceedings. We also frequently represent those facing director disqualification proceedings, meaning we provide a comprehensive service to company directors linked to furlough fraud.
If you would like to have a free confidential discussion with a member of our team, please either make a Free Request For Call Back or call us directly on 01908 414990 and we will be pleased to help you.