Furlough Fraud

Important Notice: We are NOT a fraud reporting hotline. If you suspect fraud has been carried out by an individual or organisation, please do not contact us.

What is furlough fraud?

The government’s coronavirus job retention scheme (CJRS) was announced on 20 March 2020, with the aim of protecting UK jobs during the global coronavirus pandemic.

The CJRS was introduced quickly with little and complex guidance, which has made it in HMRC words ‘a magnet for fraudsters. As of the end of June, 1,526 claims had been rejected by HMRC from companies that had ceased trading and 23,899 were halted because firms had no staff on their payroll

Most employers will receive at a minimum a review over the next few years but many will be specifically targeted, a great deal of these will be from employees reporting employers once they have been made redundant and others will have been identified by HMRC systems which are being developed.

HMRC is said to be investigating almost 8,000 reports of furlough fraud received via its anonymous fraud hotline, but the real number that will emerge are likely to be much higher.
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How has CJRS been abused?

Examples of how the CJRS might be abused include:

• placing employees on furlough and then requesting that they continue to work as normal;
• pressing or encouraging employees to work on a ‘voluntary’ basis;
• claiming on behalf of an employee without their knowledge and recovering 80% of the employee’s salary, while the employee continues to work as normal;
• claiming on behalf of a ‘ghost’ employee – someone who has been dismissed before the CJRS’s start date of 19 March 2020, or a non-existent employee who ‘commenced work’ following this date;
• employers misrepresenting the working hours of staff, so that they can maximise payments recoverable from the CJRS.

All of the above are very common and in smaller businesses HMRC believes that over 40% of claims are fraudulent.
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If you want to make a correction

There are a few options to correct your claim if you’ve been paid too much through CJRS.

• You can delete a claim straight away via the online service if the payment has been made within the last 72 hours.
• Alternatively, you can declare it as part of your next claim – this will mean the amount will be adjusted and you’ll receive less to even it out.
• If you’ve claimed a grant you weren’t entitled to and haven’t repaid it, you must tell HMRC within the 90-day reporting window.
• This is the latest of either: 90 days after you received the grant you weren’t entitled to 90 days after you received the grant you were no longer entitled to keep because your circumstances changed 20 October 2020.

Failure to do this will result in a penalty charge.
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If you want to make a voluntary repayment

If you’re not planning to make any further CJRS claims, you can make a voluntary repayment directly to HMRC.

You’ll need to contact HMRC first to get your 14 or 15-digit payment number, which starts with an ‘X’. Then, you can make a payment directly to HMRC via Bacs, Faster Payments or Chaps.
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Penalties and investigations

HMRC have the right to investigate any claim that has been made, the main penalties are:

• Possibly prosecution for employers, Directors and company officers
• At the very least this will be repayment of the pay, NIC, pension incorrectly claimed
• Penalty of up to 100% of the lost revenue
• Public humiliation by having their name published
• Directors and officers can be made personally liable for any losses to HMRC if the company fails to repay the over-claimed amounts.

Penalties can be mitigated and avoided by making a self-declaration of an error or a problem before HMRC begin an investigation, in the 90-day repayment window.
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Important Notice: We are NOT a fraud reporting hotline. If you suspect fraud has been carried out by an individual or organisation, please do not contact us.