Reports of furlough fraud received by HMRC increased by 53% from approximately 4,400 at the end of June to 6,749 by 22 July 2020. Employers are being urged to audit the claims they have made to the Coronavirus Job Retention Scheme (CJRS) to discover any inadvertent errors. In July 2020, the police made the first arrest of an individual suspected of defrauding the CJRS on a fraud worth £495,000.
The most common example appears to be employers placing employees on furlough leave and the asking them to undertake work. This is not permitted. Under the scheme rules employees are not allowed to undertake any work at all, even minor enquiries. Further, employees are now using their knowledge of this kind of furlough fraud to hold employer’s to account by making, or threatening to make, reports to HMRC. We are seeing a growing number of instances where employees made redundant, or at risk of redundancy, are using the employer’s actions against the employer to try and retain their position or obtain an increased pay out. We would urge employers not to give into such allegations but instead, if errors have been made, to make repayment of the monies to HMRC.
HMRC does recognise that some employers will make inadvertent errors. For example if the employee, of their own volition, undertakes work on behalf of the employer following a direct contact from a customer, the employer would not be guilty of a fraud. However, upon becoming aware of it, the employer should then contact HMRC and repay any money claimed in respect of the days worked by that employee. Employers would then almost certainly be justified in commencing disciplinary action against the employee for working against management instructions.
If you are an employer and you believe that you may have made mistakes in your claim for furlough money or any of your employees are alleging that you have please contact Gary Smith on 01279 712576 or via email gsmith@nockolds.co.uk and we would be happy to talk through your options.