The HM Revenue & Customs (HMRC) has received nearly 14,000 whistleblower reports regarding the misuse of the furlough scheme, with more people reporting their employers and ex-employers to the authority. As a result, UK businesses have been warned to expect a crackdown, with the HMRC stepping up its enforcement activity on furlough fraud.
Enforcing Furlough Fraud
This clampdown follows the Public Accounts Committee’s (PAC) revelation earlier this year that an estimated 8.7 per cent of money distributed by the government’s furlough scheme during the Covid-19 pandemic - £5.3 billion of around £70bn - was lost to fraud and error.
HMRC has admitted that the substantial number of furlough claims at the peak of the pandemic initially made it exceedingly difficult to spot fraudulent or mistaken claims. However, it has since added resources to its investigation teams and has published information about employers’ furlough claims online to encourage whistleblower reports from employees.
Directors or business owners found guilty of furlough fraud can face significant penalties, including custodial sentences and being made personally liable to repay the overclaimed furlough funds. So far, 268 UK company directors have been banned from running companies owing to Covid-related fraud.
As a result, businesses are being encouraged to proactively review previous furlough claims and to pre-emptively disclose any concerns to HMRC along with evidence to show that any potential mistakes were not intentional.
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