Penalties for fraudulent furlough claims

Most companies have been utilising the government’s Coronavirus Job Retention Scheme (furlough) since it launched in March. And in May, when the scheme was further extended, hard-hit organisations were relieved to be able to continue to access much needed financial support. However, according to recent media reports, it appears that some businesses have been exploiting the scheme for their own ends.

What constitutes a fraudulent claim?

In recent months thousands of complaints have been received and HMRC, who administer the scheme, have confirmed they will be looking to prosecute any business who has been using the system fraudulently or incorrectly. This includes businesses insisting employees work while furloughed, claiming furlough payments but not paying employees and claiming for employees that have not been furloughed.

Who will investigate?

HMRC have the power to investigate potential abuses. And whilst they cannot charge companies or bring them to Court, they can hand over the case to the Crown Prosecution Service (CPS) so they can make a decision on which cases to charge and take forward.

What are the offences?

According to the latest guidance, HMRC will consider furlough fraud to be one of the following criminal offences:

• False accounting
• Fraud by false representation
• Fraud by failing to disclose information
• Fraud by abuse of position
• Conspiracy to defraud
• Cheating the public revenue

What’s involved in the investigation?

During their investigations, HMRC can search your premises, compel you as a business owner to hand over any relevant documentation, search you for evidence of an alleged offence, seize any relevant evidence and interview you under caution.

A vital first step

Jas Thiara, Head of Criminal Litigation, explains more. “Firstly, we want to urge all businesses to act quickly to ensure they have claimed the right amount. Because once an HMRC investigation takes place and finds that you have claimed money fraudulently, you could find yourself being required to repay any monies you have received. In addition, you may also attract a range of sentences and orders, including imprisonment, compensation and confiscation orders, director’s disqualification and Serious Crime Prevention Orders (SCPO).”

Jas continues. “Our advice is simple. If you think you may be investigated or asked for interview, you should appoint a lawyer at your earliest opportunity. Our job then, is to speak to the investigator to find out more information about their investigation and the material they will present at interview, as well as attending the interview with you and offering the best advice we can.”

Free initial meeting for support and advice

If you believe that you or your business are being targeted by HMRC in relation to the furlough scheme, get in touch today. We offer an initial free telephone call to understand your situation and advise you of the next steps. Please contact Jas Thiara, Head of Criminal Litigation at Alsters Kelley on 02477 710200 or email jas.thiara@alsterskelley.com so we can help you to avoid a criminal prosecution.