Furlough Fraud | Rosenblatt Financial Crime Team
14th July 2020
First Arrest for Furlough Fraud | Rosenblatt Financial Crime Team
The first arrest for furlough fraud has taken place, as HM Revenue and Customs take action.
Criminal Prosecutions | Rosenblatt’s Financial Crime Team
On 8 July, a person from the West Midlands became the first to be arrested for furlough fraud as part of allegations they had defrauded the government out of almost £500,000 using the furlough scheme.
HMRC seized computers and files as part of their investigation and have frozen assets.
Richard Las, acting director of HMRC’s fraud investigation service, said “we will not hesitate to act on reports of abuse of it [the furlough scheme]. This is taxpayers’ money and any claim that proves to be fraudulent limits our ability to support people and deprives public services of essential funding.”
HMRC have received almost 4,400 reports of furlough fraud up to the end of June.
It is a criminal offence to make a false representation to HMRC with the intention of obtaining payment under the furlough scheme.
Any company director found guilty of abusing the scheme could face up to 10 years in prison under the Fraud Act 2006. A similar punishment will be applicable to those that assist in the abuse of the scheme.
HMRC also have the power to:
- make a tax charge of 100% of the amount received where a person makes an incorrect claim;
- charge a penalty where a person who has made a claim deliberately does not use it to pay employee costs and fails to report this to HMRC within 90 days.
However, there is a 30 day grace period in which an employer can make admissions to HMRC and repay the money without a penalty if it has been wrongly claimed. This 30 days starts from the date the situation arose.
The Furlough Scheme Updated | Rosenblatt’s Financial Crime Team Explains
From 1st July employers can bring back furloughed employees on a part time basis.
From 1st August, employers will need to start paying the employer’s national insurance and pension contributions.
From 1st September there will be further changes to the scheme, including a reduction to the contribution made by the government to 70% of wages and from 1st October this will go down to 60%.
The furlough scheme will close on 31st October 2020.
The government has announced the Job Retention Bonus. The government will make a one-off payment of £1,000 to employers for every furloughed employee brought back to work who remains continuously employed through to the end of January 2021.
Rosenblatt can help
Rosenblatt has a wealth of experience in financial crime and is uniquely placed to support clients facing allegations of this nature from the investigatory stage to trial.