A man from Solihull in the West Midlands has been arrested in connection with a suspected £495,000 fraud involving abuse of the Government’s Coronavirus Job Retention Scheme. This is the first action over what is commonly referred to as furlough fraud.
HMRC were put on notice about the possibility of this individual committing furlough fraud and their officers seized computers and other digital devices, with the aid of a search warrant. The funds being held in bank accounts have also been frozen.
The man has been arrested in relation to a suspected multi-million-pound tax fraud and also alleged money laundering offences. An additional 8 men from across the West Midlands have also been arrested as part of a linked investigation involving the deployment of 100 HMRC officers to 11 locations involving their computers and records being seized.
HMRC’s own statistics have revealed that more than £27.4 billion has been claimed by 1.1 million employers on behalf of 9.4 million furloughed staff. HMRC have also disclosed that it has received more than 4,400 reports of suspected furlough fraud up to the end of June 2020, and that they received an initial 800 reports within the first month of the launch of the Coronavirus Job Retention Scheme.
Richard Las, Acting Director of the Fraud Investigation service at HMRC states “The vast majority of employers will have used the Coronavirus Job Retention Scheme responsibly, but we will not hesitate to act on reports of abuse of the scheme……This is tax payer’s money and any claim that proves to be fraudulent limits our ability to support people and deprives public services of essential funding.”
It is recommended by Richard Las, that anyone concerned that their employer might be abusing the scheme should whistle-blow and report it to HMRC online.
HMRC are now be encouraging employers who may have claimed furlough payments fraudulently to come forward and repay the sums. They are giving employers the opportunity to own up through an amnesty. There is also a Finance Bill that is expected to receive Royal Assent later this month that will formally trigger a 90 day period where businesses can notify HMRC that they received furlough scheme payments that they were not entitled to receive or retain and to repay those sums that they were not entitled to receive.
It is clear that HMRC mean business and have the teeth to prosecute those employers who have fraudulently been making claims. It is anticipated that there will be an increasing number of reported cases in the coming months with a lot of opportunity to name and shame those businesses and individuals.
For more information on the Coronavirus Job Retention Scheme please contact Steven Eckett, Partner and Head of Employment on 020 3053 6506 or email@example.com
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