Furlough Fraud - Is There Such A Thing?

What a difference a couple of months makes.

The Furlough Grant scheme (or Coronavirus Job Retention Scheme) was one of the first government financial initiatives announced by the chancellor, Rishi Sunak, when businesses were forced to close as part of lockdown procedures instigated to control the spread of Covid 19.

Whilst there have been many developments, in terms of the rules of the scheme, the raison d’etre has remained the same since it was set up, namely to retain as many jobs as possible through the government paying a large proportion of staff wages of Covid 19 impacted businesses. Without this intervention there is no doubt that millions of jobs would have been lost.

A scheme of the same like has never been seen before such that there was no real blue print and the details and rules of the scheme were developed at a breakneck pace in response to a rapidly evolving situation.

The scheme is still in its relative infancy, however, we are aware that there have been c800 calls to the whistleblowing line established when the scheme was incepted and we are aware that a significant tranche of HMRC’s investigation staff have been re-assigned to assist with the operation of the scheme.

There is more than a suggestion, therefore, that HMRC will be actively investigating applications for payments from the scheme to ensure that all rules are complied with. Whilst, as far as we are aware, there has been no formal action taken as yet against any applicants it is a fair assumption to assume that these will follow in the coming weeks and months.

In our view, allegations of furlough fraud will probably end up falling into 2 main categories:

1. Claims for fictitious / non-eligible staff member.
2. Claims for eligible staff who have continued to work in contravention of the scheme rules.

In terms of the full sanctions for any proven misfeasance these are currently unknown but would certainly include repayment of any wrongly claimed amounts.