Furlough Fraud

This month has seen the first arrests following allegations of fraudulent claims under the Coronavirus Job Retention Scheme. The relative simplicity of the scheme has inevitably led to abuse by some seeking to take advantage of the cash available to employers hit by the pandemic. The amnesty period being offered by HMRC for self-reporting mistaken or fraudulent claims will enable a small window to employers to rectify errors without facing additional penalties, but what are the other risks posed by misuse of the scheme?

Aside from the wrath of HMRC and the possibility of criminal proceedings, wrongful use of the furlough scheme could give rise to a range of claims from disillusioned employees. Public knowledge of alleged misuse of the scheme,  or even use which simply ‘feels’ wrong, risks damage to reputation, which is perhaps behind the raft of big name companies publicly committing to returning furlough cash which they didn’t actually need.

In the employment law world, we are seeing a sharp rise in whistleblowing allegations from employees who claim that they have been asked to continue working while ‘on furlough’. Although the advent of the flexible furlough at the beginning of July does provide more scope to employers wishing to encourage a phased return to work, the risks of disenchanted employees blowing the whistle on improper use remains. Whistleblowers are protected from detriment or dismissal caused by the whistleblowing and a complaint of fraudulent furlough claims could form the basis of a successful claim, bringing with it pain, inconvenience and cost which would overshadow any short-term benefit from the furlough cash.

Genuine mistakes in claiming furlough are likely to be dealt with sympathetically by HMRC, so the advent of the amnesty scheme is perhaps a good opportunity to audit claims to date and ensure any anomalies and notify those within the 90 day window.

 

If you would like further advice tailored to your particular circumstances, please contact us.