HMRC cracks down on furlough fraud with first arrest

HMRC cracks down on furlough fraud with first arrest

The taxman has cracked down on furlough fraud, arresting a West Midlands man as part of an investigation into a suspected £495,000 Coronavirus Job Retention Scheme fraud.

HM Revenue & Customs officers executed a search last week (July 8) and arrested the 57-year-old — the taxman’s first arrest in connection to alleged fraud relating to the furlough scheme.

Computers and other digital devices were seized while funds held in a bank account relating to the man’s business have been frozen.

Richard Las, acting director of the fraud investigation service at HMRC, said: “The CJRS is part of the collective national effort to protect jobs. The vast majority of employers will have used the CJRS responsibly, but we will not hesitate to act on reports of abuse of the scheme.

“This is taxpayer’s money and any claim that proves to be fraudulent limits our ability to support people and deprives public services of essential funding.”

The arrested man was also arrested in relation to a suspected multi-million pound tax fraud and alleged money laundering offences, while a further eight men from across the West Midlands have been arrested as part of the linked investigation.

Richard Morley, partner in tax dispute resolution at BDO, said the latest arrest underlined “just how serious HMRC” took the misuse of the Covid-19 support schemes.

He added: “The Finance Bill will trigger the start of the 90 day period for businesses to notify HMRC that they received furlough scheme payments which they were not entitled to receive or retain.  

“Given that HMRC has clearly started to actively follow up on tip-off’s and potentially incorrect claims, instead of waiting for the start of the 90 day notification period, businesses and individuals should start reviewing their furlough claims now.” 

At the end of May the taxman had received almost 1,900 reports from the public of alleged furlough fraud, with HMRC promising to take criminal action in the most serious cases.

The CJRS is set to run until October, after it was extended by chancellor Rishi Sunak in May, but employers will soon have to start sharing the responsibility of paying furloughed employee's salaries.

A number of people have contacted FTAdviser with concerns their own bosses, or those of family members, were fraudulently claiming under the scheme. 

In many cases employers were allegedly claiming on the scheme whilst asking their employees to continue working, and in some cases still only paying the 80 per cent salary contribution arranged by the government.

HMRC has pledged leniency to those who make genuine mistakes with their applications, insisting it was “not trying to catch out” anyone through its penalty process relating to the scheme.

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