COVID-19 Job Retention Scheme Fraud


HMRC has announced that they have received over 3,000 complaints that businesses are claiming fraudulently for the Job Retention Scheme.  Some businesses are claiming for employees who had not been placed on Furlough; other businesses are claiming for a Furloughed employee, but not passing onto the employee all of the payment; and others are claiming for employees who had been Furloughed, but who were still working.  A survey by Crossland Solicitors of 2000 employees across a range of business sectors, found that 34% of those employees had been asked by their employer to work while being furloughed.

Regardless of how a business is abusing the Scheme, HMRC views that the business is committing fraud by false representation under the Fraud Act 2006, section 2. 

The Government set out that a Furloughed employee is an employee who “has been instructed by the employer to cease all work in relation to their employment.”  They can take a job with a different unconnected employer (as long as their employment contract allows this); or they can volunteer for a different organisation – but they cannot volunteer for their own employer, even if it is a charity.

HMRC has made clear that it will investigate abuse of the Job Retention Scheme, raise assessments to claw-back the grant claimed incorrectly or where the grant has not been paid to furloughed employees.  Where the claimant is a company, the company officers can be made jointly and severally liable for the claw-back.

The Finance Bill, which is due to receive Royal Assent in late July, enables HMRC to apply penalties where a business has deliberately made an incorrect claim, or has failed to pay the grant claimed to its employees.  These penalties could be up to 200% of the amount over-claimed.

It is expected that these penalties will be waived if the business informs HMRC of any over-claims within 30 days of the Bill receiving Royal Assent. 

Where a client is concerned that they may have over-claimed the Job Retention Scheme, we would encourage immediate action, ie. that any overclaims are amended now by deducting from the current month’s claim.  Please note that any underclaims for previous months has to be amended by HMRC.  If you have any concerns, please speak to either Jackie or Andrew about this.

Castletons Accountants

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