Disappointingly, HMRC say they have received 795 reports of fraudulent furlough claims. They are not yet investigated, but they will be, and those who have defrauded the system will be prosecuted.
What is the Coronavirus Job Retention Scheme?
Employers apply to the Coronavirus Job Retention Scheme (CJRS) in order to claim furlough pay for their employees. You cannot apply yourself, as an individual employee, it is your employer’s decision.
‘Being furloughed’ is not the same as being made redundant or being laid off. It means that the government are paying 80% of your salary to your employer, so they can pay you to not work. For people who simply can’t work from home, this provides a stop-gap for them to stay safe and still have an income. The maximum any employee can get is £2,500 per month, even if 80% of their salary is more than that amount.
You are not allowed to receive furlough pay and still work for that employer. You are allowed to take another job and still get your furlough pay.
It means employers with closed businesses can pass on the cost of their payroll to the government. And don’t have the extra worry of laying off their staff, knowing the devastating consequences. Employers cannot ask their employees to come to work while they are furloughed.
So far it has been used by over one million businesses, paying 7.5million workers across the UK. And the Chancellor recently announced it will be extended until October 2020, in order to help businesses regain their footing.
How is the scheme being defrauded?
The report of fraud are coming to HMRC from individual employees about their employers. There appears to be two main reasons why employers are being reported.
- They have claimed furlough pay through the CJRS but are not paying their employees their full 80% entitlement.
- They are paying employees their furloughed salary and expecting them to be in work.
What are HMRC doing about this fraud?
As the COVID-19 response takes priority, none of these reports have been investigated yet. All tax regulations assume that taxpayers provide honest, accurate information. The same is true for the Coronavirus Job Retention Scheme, it is not based on an honour system. Integrity on the behalf of applicants should be an unquestioned fact. But we all know that there are always those that will try and scam a system, so HMRC have high functioning processes to combat this. And they will be applied to anyone found to have made false claims for furlough pay, or for not properly following the rules of the CJRS.
This will not be immediate, it may be some months before fraud investigation can be prioritised again, but it will be done. The HMRC fraud reporting hotline is not currently available for reporting incidents of fraud. Staff working from home cannot receive transferred calls of this nature, for security reasons.
HMRC say: “We are committed to ensuring the tax systems we operate are used fairly and efficiently, and where necessary will take action to ensure compliance with the relevant rules, regulations and legislation that govern the UK taxation systems. We value all the information provided to us by members of the public aimed at helping us achieve that goal”.
“We’d ask anyone concerned that 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. We won’t hesitate to take criminal action against the most serious cases.”
You can still submit a fraud report using HMRC’s online form.