Just like any scheme that involves claims, furlough hasn’t been exempt to people wanting to play the system. Both employers and employees alike. This has led to an issue called ‘furlough fraud’.
This is mainly used to describe employers who are claiming back wages under the job retention scheme despite the employee having actually worked for them. Or, since the flexible scheme was introduced last July, claiming back on days and weeks where the employee has actually been working for them.
There have also been instances whereby businesses have found themselves guilty of furlough fraud by claiming money back for employees that don’t actually exist. Or for employees that have left the business.
Ensuring that you don’t fall foul of furlough fraud
Mistakes in business can happen. And if you are a business owner and you have wrongly claimed through the furlough scheme. this won’t always amount to fraud. However, if you have noticed such an error and own up and report this error in a timely manner to HMRC, the chances are that you will end up having to pay the money back.
Before claiming for any of your employees through the furlough scheme, it’s important that you familiarise yourself with the furlough scheme. There are plenty of guidelines published by the government that can help you arrive at a decision as to whether your employee or business is in a position to claim.
Consequences of committing furlough fraud
A high priority for HMRC is to launch criminal investigations into those businesses who with purpose and deliberation avoid complying with the furlough scheme. A criminal investigation may not always be warranted, and in many of the cases a financial penalty may just be applied, however, with more serious cases, there will be no option but for the HMRC to launch a criminal investigation.
Following the investigation, one or more of the following charges could be brought against you and others in your business-
- Fraud by false representation.
- False accounting.
- Conspiracy to defraud.
- Money laundering.
- Cheating the public revenue.
In addition to the above, if the business in question is a corporate entity, it could also be investigated by the rather new offence of failing to prevent the facilitation of tax evasion. Which was introduced back in 2017.
Recent figures released by HMRC and the government show that there are quite a number of investigations currently being carried out into businesses.
Want to know more?
Here at D&K Accounting, we are a team of Profit First professionals with years of experience in helping businesses get their books in order and stay compliant with all of the regulations they need to. If you want to know more about the furlough scheme and its relationship with your business, feel free to get in touch.