Now that the Government has extended the Coronavirus Job Retention Scheme it is no surprise that they have released further guidance as to how they intend to tackle furlough fraud.
There’s several ways in which furlough fraud can occur:
- It can be any amount the employer was not entitled to receive (including where the employer has asked the employee to work ‘on the side’ when furloughed), back dating claims, claiming for staff who were not furloughed, claiming for staff and not passing on the grant;
- Claiming for an employee who no longer works for the employer.
HMRC have said that if the employer spots the overpayment and notifies HMRC within 90 days of the date they received the overpayment there will be no financial penalty.
The scale of penalties where the employer doesn’t spot the overpayment and the action was deemed to be non deliberate will range from 0-30% of the grant received plus repayment of the overpaid grant.
Where there is a deliberate fraud detected by the HMRC it will be 50% to 100% of the grant plus repayment of the overpaid grant.
The Government has emphasised that any overclaimed grant payments must be repaid. This can be done via the next furlough claim or by contacting the HMRC directly. If this happens there will be no further action.
Records are going to be key with Furlough.
Employers must keep furlough records securely for 6 years.
Could this become a criminal matter?
In some cases, the act of deliberately defrauding the HMRC will be considered too serious to just levy a penalty and only a criminal investigation will be appropriate (and indeed some arrests have already been carried out).
Employees are encouraged to notify the HMRC if they believe their employer has broken the rules and/or committed furlough fraud. I also know that Accountants are prepared to ‘sack fraudulent customers’ and notify their authorities and HMRC.
From 1st December a list of those who claim will be published here’s the details as to how this will work.
- the employer name & Ltd company name for Ltd Companies or LLPs
- indication of value of claim