Furlough fraud: People who exploit scheme urged to come clean within 90 days

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Furlough fraud has seen some people using the scheme take advantage of it by failing to follow the rules and regulations laid out by the government. Furlough was first introduced back in March, and extended until October, providing over nine million people with 80 percent of their salary up to £2,500. The scheme arguably saved many people from facing unemployment, as it allowed them to be retained by their company and still be paid amid lockdown.

However, original rules stipulated people were not allowed to work for their employer during their furlough period.

Despite this, many companies now stand accused of breaking the rules: forcing their employers to continue working, or failing to tell them they have been furloughed until they received a reduced pay packet.

In fact, HMRC has now received close to 8,000 reports from people who believe companies may have broken the law. 

However, for those who have taken advantage of the system, there is a grace period available to come clean.

HMRC has offered a 90 day correction window to employers, offering the opportunity for people to refund their claims without risk of penalty.

The Revenue has said it will be fairly lenient on those who pay the money back of their own accord.

It is the responsibility of employers to make sure they are following the rules which includes being vigilant over potential overpayment.

HMRC has said it hopes employers will admit to overpayments rather than potentially risking an investigation further down the line. 

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In July, Express.co.uk spoke to Patrick Cannon, leading tax barrister, who commented on the approach to furlough fraud.

Mr Cannon said: “HMRC will definitely be pursuing cases. I believe there will be a lot of routine enquiries opened into payments even after the scheme ends.

“I anticipate there will be random checks on companies, asking them to send over information relevant to a business and furloughing. If that gives cause for suspicion, they will be following that up.

“Six to 12 months down the line, it will really come home to roost how much money has been paid out.  It will then be easy for the government and HMRC to fall into the mindset of raking as much money back as possible paid in breach of the rules. It is money for old rope – if they have clear cases of furlough fraud then it is going to be straightforward to get it back.”

The 90 day window is applicable to the latest of either:

  • 90 days after the employer received the grant they were not entitled to
  • 90 days after a person received a grant they were no longer entitled to due to a change in circumstances
  • October 20th, 2020

If failing to notify, HMRC will assess what the employer knew and when they knew it.

If it is deemed that a company knew it was not entitled to the grant, or that it stopped being entitled because of circumstantial changes, then failure to report is considered “deliberate and concealed”.

A penalty of up to 100 percent of the grant could be charged, or potentially criminal offences brought as a result. 

At the start of August, an HMRC spokesperson told Express.co.uk: “We’d ask anyone concerned their employer might be abusing the scheme to please contact us.

“It could be that you’re not being paid what you’re entitled to, they might be asking you to work while you’re on furlough, or they may have claimed for times when you were working.

“Reports can be submitted to us entirely anonymously and everything we receive is assessed and a decision made on the most appropriate course of action. 

“We’re not trying to catch people out – if it turns out to be a genuine mistake then we’ll help put it right, and if it’s more serious then we’ll step in.

“These reports are just one way that HMRC identifies fraud. Claims are checked and payments may be withheld or need to be repaid if the claim is based on dishonest or inaccurate information. We won’t hesitate to take criminal action against the most serious cases.”

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