Government To Start Investigating Furlough Fraud


The news that a businessman from the West Midlands has been arrested on suspicious of committing some pretty serious furlough fraud – to the tune of £495,000 – seems to be an indication that the government are about to get serious about taking back money that was claimed incorrectly.

It’s no surprise that the government would want to try and clawback some of their money in this way. Far more businesses took advantage of the furlough scheme than had been anticipated, with some 8.9million workers furloughed as of 7 June. That’s around a quarter of the UK’s workforce.

While the majority of these will be legitimate claims, it’s clear that a small but significant percentage will not be. Fraud can happen when a business furloughs an employee while still expecting that person to work (even if they ask them to work reduced hours or from home).

women in the textile factory working on sewing machines

The rules are very simple on this point: if you furlough your employee then they cannot be asked to perform any work for your company up to 30th June 2020. Some reports suggest that this may have happened in as many as 33% of cases.

Although from the 1st July 2020 the government states the following regarding companies allowing furloughed employees back to work:

From 1 July, employers can bring furloughed employees back to work for any amount of time and any shift pattern, while still being able to claim CJRS grant for the hours not worked.

If you run a business and your concerned about errors that may have been made when claiming for furlough, the government is currently running a notification period during which businesses can report any money that they received incorrectly without fear of legal action. The start of lockdown was a very frantic and stressful time, and the rules and expectations weren’t always clear. This is exactly the kind of environment in which mistakes are easily made, so it’s important to check and double check any claims that your company has made to be sure that you aren’t at risk.

Those who are found to have received money that they weren’t eligible for are likely to see that money taxed at a 100% tax rate, effectively forcing them to repay all of the money. This will allow the government to take back some of their funds, and may help them to cover what is proving to be a very expensive scheme.

Man with laptop looking worried

For employees who have been furloughed the message is clear: your employer should not have asked you to do any work for them over this period, and if they have then you can report it to the HMRC. This doesn’t apply if you’ve done work for another unrelated business while on furlough (for instance if you decided to freelance during lockdown to make up for lost wages) – only if you were told to carry on working for your usual employer.

The following is a quick breakdown of the governemnts plans for furlough from August – October:

  • Government pay 80% of wages up to £2,500 in August. Employers will now start paying furlough portion of ER NICs and pension contributions.
  • Government pay 70% of wages up to £2,187.50 in September. Employers pay ER NICs and pension contributions. Topping up wages to previous 80% furlough level of £2,500.
  • Government pay 60% of wages up to £1,875 in October. Employers pay ER NICs and pension contributions. Topping up wages to previous 80% furlough level of £2,500.
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