Furlough fraud: First arrest sends warning shot to companies dodging the law 


    Furlough fraud is the term which is used to describe those who break the rules laid out by the government regarding a scheme intended to help people remain employed amid the lockdown crisis. HMRC has now confirmed a man in the West Midlands has been arrested in connection with alleged fraud of the scheme. The Revenue stated the man was arrested on July 8, in connection with claims of a £495,000 fraud of the Job Retention Scheme.

    “As usual, we have built steps in to prevent mistakes and fraud happening in the first place, but anyone who is concerned that their employer might be abusing the scheme should report it to HMRC online.”

    Furlough, or the Job Retention Scheme, was first introduced in March and involved the government meeting 80 percent of an employee’s salary up to £2,500.

    In return, employees were at first required not to undertake any work for their business if they were placed on this scheme.

    They were, however, permitted to undertake other roles such as volunteering, as long as it was not for the company they had been furloughed from. 

    However, whistleblowing charities and other researchers reported a number of people had spoken out to say their employers had been breaking the law.

    One woman, speaking anonymously to legal rights app Lawya.com said: “I know if I’m not useful to my employer in some way, and they are struggling financially, it makes sense for me to be the first to be let go.”

    Some were forced to work, while others worked without being told they were on furlough, and only became aware when they received 80 percent of their paycheck. 

    This, of course, is against the law, and those found to be operating within this way could face harsh penalties from HMRC.

    HMRC has now said it is dealing with 4,400 reports of furlough fraud across the UK.

    This is up from the 1,900 reports the Revenue had received mere weeks previously. 

    Under the current rules, employers who are found to have furloughed staff can face charges of fraud. 

    HMRC has now said it will go after all company directors who deliberately flout the rules, and they could face hefty penalties or charges.

    The organisation has urged people who have experienced furlough fraud to contact them through the HMRC Fraud Hotline information report form.

    Jim Harra, the chief executive of HMRC, previously stated it was highly likely the scheme would be exploited – by both employers and organised criminals. 

    But Mr Harra also said HMRC had struck an appropriate balance between protecting the Treasury from abuse, and providing help to those who need it as quickly as possible. 


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