What is furlough fraud?

Furlough fraud is where an employer deliberately made an excessive claim under the furlough

scheme.

There were numerous ways in which employers could commit furlough fraud, including the

following:

• Making a claim under the scheme for a non-existent employee;
• Asking an employee to return to work as a “volunteer” without pay;
• Not paying employees the full amount received from HMRC;
• Placing an employee on furlough but requiring them to continue to work as normal
• Incorrectly reporting the hours an employee has worked, to increase the amount recoverable.

There is a genuine error correction time for 90 days.

How is HMRC tackling furlough fraud?

HMRC’s annual report for 2020/21 estimates that £5.2 billion of the £60 billion paid out during that period was because of fraud or paid out in error.

The government has invested over £100 million in a HMRC Taxpayer Protection Taskforce, with

1,265 staff, to tackle the problem.

Criminal investigations:

The first arrest for alleged furlough fraud was back in July 2020, involving a suspected £495,000 fraud.

Civil enquiries:

HMRC will use its full range of civil powers, including compliance checks, and the Contractual

Disclosure Facility (CDF), for cases where HMRC suspect fraud but do not use their criminal

investigation powers, when investigating furlough claims.

Penalty:

The penalty can be up to 100% of the wrong claim, but the amount charged will depend on

the circumstances.

We are specialist in HMRC investigation and could help you if in case you are contacted by HMRC or you wish to make a Contractual Disclosure Facility.