Have you as a responsible business owner put in place measures to protect your company from the risk of being wrongfully accused of furlough scheme fraud?
It has been widely reported in the media that the HMRC is receiving hundreds of reports about furloughed employees who are being asked to work even though their employers are claiming 80% of their salary through the state job retention scheme.
According to an article in the Guardian, “The government has received nearly 800 reports of suspected fraud of its job retention scheme, launched less than a month ago.
“The tax authority, HMRC, which is responsible for overseeing the furlough scheme under which the government pays 80% of the wages of those who cannot work because of the coronavirus lockdown, said it was assessing the fraud reports and anyone with further information could make a report online.” Read more here.
Furlough Scheme Fraud
The furlough scheme has been set up to reimburse employees who are on a leave of absence but who are kept on the payroll.
There are two types of furlough scheme fraud:
- Asking a furloughed employee to return to work as a ‘volunteer’ without pay.
- Furloughing an employee (with or without the employee’s knowledge) and they continue to work as normal.
There will also be examples of:-
- Furloughing staff and not paying them what they are owed under the scheme.
- Employers making backdated claims that include periods in which the employee was working.
- Employers pretending to hire staff shortly prior to the qualifying period to take advantage of the payments.
- Not paying the full amount received from HMRC to the employee.
The current CJRS Guidance explains very clearly that HMRC will be checking claims and even if payments are made under the scheme, monies paid out may still need to be repaid if the claim is found to be fraudulent or is based on inaccurate information.
If HMRC can prove a claim under the furlough scheme is fraudulent, not only will payments be withheld or paid back; but the employer/employee could be at risk of criminal prosecution.
To help identify fraudulent furlough claims, HMRC has put in place an online portal for employees or members of the public to report the suspected fraud.
Preventing Furlough Scheme Fraud
Responsible business owners should put in place measures to protect their company from the risk of being wrongfully accused of furlough scheme fraud.
Some measures employers can take include:
- Ensuring pay roll and other relevant staff are fully aware of the eligibility requirements of the furlough scheme.
- Updating or introducing fraud risk assessments and compliance policies and procedures to protect against the risk of fraudulent furlough claims.
- Communicating with employees (or their managers) directly to ensure they understand that whilst furloughed, they are not required to carry out any work for the organisation.
How can HCHR help?
Clients are contacting us about the operation and implications of the CJRS. For example: –
- Our team has been extremely busy advising employers on how to approach furloughing employees and to ensure that the correct steps are taken in accordance with the rules and guidance. They are also providing advice on other aspects of staff retention and redundancy etc.
- We have been advising companies and individuals regarding compliance with the Government’s developing policies on managing the return to work and safe working practices. For more information visit our website
- The situation is without precedent and the fact that we are all labouring to some degree under the same difficulty perhaps explains why the different investigating agencies are pooling their experience across the board. It is worth noting that many Police, FCA, HMRC etc. officers are putting investigations together from laptops and conference calls on their respective kitchen tables! The Revenue in particular will be under pressure from the exchequer to claw back whatever they can to reduce what will be a massive burden on the taxpayer when all of this is over. There will be easy targets and there will be over-zealous prosecutions. Distinguishing between the two requires expert input and HCHR is perfectly placed to assist.
We are currently offering a 30 minute phone consultation, in which we can discuss this subject or any other employment related questions, with a follow up email summary covering all relevant advice for just £99 + VAT.
This special offer has been introduced to help businesses protect themselves during these unprecedented times – to book your consultation and give yourself some necessary peace of mind please call 01792 296 178 or email email@example.com