Will HMRC investigate furlough fraud?
There are thought to be thousands of whistleblowing reports made that allege some employers have been misusing the scheme. Legislation was passed in July 2020 that gave 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, it also has the power to levy a financial penalty on that business. Businesses were given a certain time period to correct any errors on their application for CJRS by contacting HMRC.
What powers do HMRC have during a furlough fraud investigation?
HMRC have a range of powers available which they can use if they suspect furlough fraud has occurred. A few examples of the powers available include interviewing a person under caution if they believe they have involvement in the furlough fraud and obtaining a warrant to search premises.
If you have been or anticipate you will be arrested or interviewed in relation to furlough fraud, you have the right to appoint a legal representative to provide tailored advice to how the matter should be approached and dealt with. The sooner you appoint a specialist fraud solicitor, the sooner yours and your businesses’ interests will be protected.
Is furlough fraud a criminal offence, and what is the penalty?
If you commit “furlough fraud”, a criminal offence is likely to have been have been committed. Whilst “furlough fraud” is not a specific offence in itself, it may result in offences such as fraud, false accounting, money laundering and/or conspiracy to defraud being committed.
Who is liable for furlough fraud- is it the employer or the employee?
Corporations, directors, and individuals can all be investigated, prosecuted and ultimately convicted of the criminal offences stated above.
Is it illegal to claim furlough and work?
As an employer, if your furlough an employee under the scheme, the employee should not be undertaking work for you. The furloughed employee may be able to continue to claim furlough pay from you whilst simultaneously undertaking work for an alternative employer (subject to the terms of their employment contract).
What should I do if I have been overpaid through the furlough scheme?
If you have concerns that you have received a higher amount of furlough than you are entitled to, you should notify the HMRC in order to repay the overpayment, should you still be within the notification period of 90 days from receiving the grant.
If the notification period has passed and you find yourself being investigated by the HMRC and/or you are accused of committing furlough fraud, it is vital that you contact our specialist fraud solicitors to represent and protect your interests.
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. 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 with that context 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 fraud cases and can help you at every stage of the process. Call us today on 0161 696 6188.