Furlough fraud

More about furlough fraud

The Coronavirus Job Retention Scheme (CJRS), also commonly known as the furlough scheme, is a measure that was put in place by the UK government during the 2020 COVID-19 pandemic, to help businesses affected by coronavirus to avoid making staff members redundant, when possible. The scheme paid a proportion of the wages of furloughed employees (80% when the scheme started in March 2020, gradually reducing from August 2020) and thereby reducing the outgoings of that business. Any employees who had been furloughed under the scheme were not allowed to do any work for their employer at this time but were able to work elsewhere whilst on furlough, as long as their employment contract permitted this.

At the time of writing, there are thought to be approximately 3,000 whistleblowing reports made that allege some employers have been misusing the scheme. This has led to draft legislation being submitted in June 2020 that gives power to HMRC to investigate suspected furlough fraud, including undeclared overpayments or where the grant provided was not used to pay staff wages.

If HMRC believe that furlough fraud has been committed by a business, they can not only reclaim any overpaid or misused money through the tax system, will also have the power to levy a financial penalty on that business. The plan is to allow businesses a grace period after legislation is passed of 30 days to correct any errors on their application for CJRS by contacting HMRC.

Corporations, directors, and individuals can all be investigated, prosecuted and ultimately convicted of fraud. The maximum sentence is 10 years or an unlimited fine.

What to do if your business is accused of furlough fraud

If your business is accused of misusing the CJRS grant, you should seek expert legal advice as soon as possible. If there is a problem with how your company has used the scheme, it may have been an honest mistake or misunderstanding. It’s understandable that with the general confusion of the global pandemic and the sudden introduction of lockdown measures, this led to a rush to file the appropriate paperwork for many employers who chose to furlough some or all of their staff and errors can easily occur. The experienced team at Stephensons can offer all of the support and legal advice that you need to deal with this issue. We have a proven track record when defending business fraud cases and can help you at every stage of the process. Call us today on 0161 696 6188.