Yorkshire Times
Voice of the North
11:06 AM 26th July 2020

Time is ticking for businesses to admit to furlough fraud as 30-day window of opportunity comes to an end

Image by Mohamed Hassan from Pixabay
Image by Mohamed Hassan from Pixabay
Businesses that used the Coronavirus Job Retention Scheme (CJRS) have been given a 30-day window of opportunity, from 1 July, to correct their submissions, however research suggests as many as a third (34%) of employees have been asked to work while on furlough, making their claims fraudulent.

Law firm Langleys Solicitors, with offices in York and Lincoln, is reporting that as many as 8,160 York-based employees could be in breach of the Government’s furlough scheme, as businesses have just a week left to correct claims they know to be fraudulent.

The scheme, first introduced by the chancellor in March to protect jobs during lockdown, has so far been used to save 30,000 jobs in the York region, supporting 24,000 payroll workers and 6,000 self-employed residents.

As many as 10,000 employees in the York Outer constituency and 14,000 in the York Central constituency have been furloughed, meaning as many as 8,160 employees could have breached the terms of the government support.

Mini Setty
Mini Setty
Mini Setty, partner in employment law at Langleys Solicitors, said: “As businesses get ready to welcome their employees back to the workplace, from 1 August, they should also review their use of the Coronavirus Job Retention Scheme to make sure they do not fall foul. Following the speed with which the CJRS was introduced by the Government to minimise the economic impact of the pandemic, it is entirely possible that employers may have not applied the CJRS as it had been intended, and mistakenly made fraudulent claims. However, now is the time to correct these submissions before businesses face serious repercussions – something which could mean the end for already financially-fragile firms.”

Following news of the first arrest in relation to the furlough scheme fraud, Kate Hindmarch, partner and head of employment team, at Langleys Solicitors added: “We welcome the crackdown, and the first arrest for abusing the scheme is a good response on behalf of the taxpayer.”

CJRS has been used by 1.1 million employers, to protect 9.1 million jobs with the total value of claims made so far reaching almost £21 billion. Fraud has been alleged by almost 2,000 whistleblowing employees so far, according to HMRC.

The Government has recently published draft legislation that will take effect from Royal Assent of the Finance Bill 2020 and will apply to all payments made under COVID-19 support schemes. The penalty measures outlined in the bill will only apply if the person fails to notify HMRC about the situation within 30 days, or 30 days after the Finance Bill receives Royal Assent if it arose before that.

Ensuring claims are correctly submitted is becoming somewhat complex with the introduction of flexible furlough. Up to July it was clear that employees were not permitted to work whilst on furlough, whereas employers are now able to agree flexible working arrangements with their employees with periods on and off furlough.

Regardless of the complexity of the flexible furlough rules, it is important to ensure the scheme rules are abided by, otherwise employers could face even higher costs due to the enforcement powers of the HMRC.