Furlough Fraud: Advice for Employers

By Rachel Davis

Principal Associate

Furlough fraud, which is the exploitation of the government’s Coronavirus Job Retention Scheme (CJRS), is on the rise.

The CJRS, which was brought in to support businesses and minimise unemployment as a result of the coronavirus pandemic, has been used by two thirds of businesses since March, supporting over nine million jobs.

Whilst the majority of companies are using the system correctly, some have deliberately set out to flout the rules at the taxpayer’s expense, and HMRC is now preparing to tackle fraudulent and erroneous claims. 

HMRC acknowledges that due to the speed at which the scheme was initially introduced, resulting in uncertainty for businesses under immense pressure at the outset of the pandemic, some employers may have inadvertently broken the rules.

As the furlough scheme is complex, with the rules changing numerous times, HMRC is expected to be more lenient with employers who self-report and admit genuine mistakes.

Where it can be proven that employers have intentionally abused the system, such as making an incorrect claim, encouraging furloughed staff to work or not passing furlough payments onto workers, financial penalties will be imposed.

In more serious cases, HMRC can bring criminal charges which may even result in a prison sentence.

It is clear that HMRC will be carrying out extensive investigations to uncover erroneous claims and intend to treat fraudulent conduct seriously. The penalties imposed on employers who are found to have deliberately and knowingly defrauded the scheme and concealed information could be significant.

Employers are therefore urged to ensure their records are correct and double check claims they have made under the scheme to ensure the sums claimed and paid out are correct, the government guidelines have been adhered to, and declare any mistakes without delay, in order to avoid the penalty and stigma of committing furlough fraud.

For more information and to find out how we can help you, please contact our Employment Team on 0345 646 0406 or fill in our online enquiry form and a member of our Team will be in touch.