Furlough Fraud

Recouping the cost of furlough fraud has been high on HMRC’s priorities in recent years. Investigations into furlough scheme fraud are becoming increasingly common, with penalties including fines, director disqualification and even imprisonment.

If you come under investigation for furlough scheme fraud, please contact us now at Altion Law. Whether you made a genuine mistake or otherwise, our experienced solicitors can work on your behalf to secure the best outcome.

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.

What was the Furlough Scheme?

In England and Wales, the government introduced the furlough scheme to support businesses and their employees during the Covid-19 pandemic. Officially known as the Coronavirus Job Retention Scheme (CJRS), it was introduced in March 2020 to provide financial support to employers who were unable to operate as usual due to the pandemic.

The scheme allowed employers to furlough their employees, meaning that they could keep them on their payroll, but the government would pay 80% of their wages up to a maximum of £2,500 per month. The aim of the scheme was to prevent mass redundancies and keep people employed. The scheme closed on 30 September 2021.

What is Furlough Scheme Fraud?

Due to the fast-evolving nature of the pandemic, the furlough scheme was not tightly regulated. This meant some companies intentionally took advantage of the government’s financial support. Others made genuine mistakes which have not been identified, either because the company closed, or an audit has not been carried out.

Incorrectly claiming funds under the furlough scheme has become known as ‘furlough fraud’. Examples of furlough fraud include:

Employers falsely claiming that their employees were furloughed
Employees continuing to work while on furlough
Employers claiming furlough for non-existent employees
Employers misrepresenting the working hours of an employee to get more money
Employers retaining part (or all) of the money, instead of paying it to a furloughed employee

Furlough Fraud HMRC Investigations

HM Revenue and Customs (HMRC) has been taking action to detect furlough fraud. They have been investigating cases of suspected fraud and have set up a hotline for people to report suspected cases. They have also launched a campaign to raise awareness of furlough fraud and the penalties for those who are caught.

The penalties for furlough fraud can be severe. Those who are found guilty of furlough fraud can be fined or imprisoned, and in some cases, both. Company directors who played a role may also be disqualified. HMRC has already started to take action against those who have committed furlough fraud, and more cases are expected to follow.

Read more about HMRC Furlough Fraud Investigations.

Furlough Scheme Fraud: Organised Crime, Mistakes and Cloned Applications

Furlough scheme fraud has been linked to organised crime. The lack of regulation meant the scheme was open to abuse, and it is these cases of ‘deliberate dishonesty’ that result in harsher penalties.

However, there are also instances in which furlough has been incorrectly claimed due to a genuine mistake, or due to the actions of an errant individual within the organisation. Some have even been the victims of cloned applications, meaning that while they are entirely innocent, they still come under investigation by HMRC.

What to do if you are linked to Furlough Fraud

If you come under investigation for furlough fraud, we recommend contacting our solicitors straightaway. Being deliberately evasive and refusing to co-operate with HMRC only prolongs the process and, typically, results in harsher penalties being imposed. Instead, contact our solicitors to discuss the best strategy in your case. We can help you understand why you have come under investigation, the risks involved, and how best to limit the potential liabilities.