News | Legal News

18 June 2020

Furlough fraud

The furlough scheme was introduced as a means for companies to temporarily suspend employees with the government paying up to 80% of their salaries.

Two thirds of British businesses have used the scheme since it was announced with a third having furloughed at least 75% of their workforce. The Office for Budget Responsibility have estimated that the furlough scheme will cost the government at least £42 billion.

Being placed on furlough means that you are still paid by your employer and continue to pay tax from your income, however you are not able to conduct any work for your employer.

A BBC report states that there have been more than 3,000 reports of furlough fraud since April 2020. A recent survey found that more than a third of furloughed employees have been asked to undertake work by their employer.

If employees ‘tip-off’ HMRC that their employers have broken the scheme it would be easy for HMRC to investigate by cross referencing the PAYE system and the evidence that the employee has been asked to work.  The government has the right to audit the scheme at any time and if any sign of abuse is found they have the right to claw back the payments. If it is found that the employer intended to break the rules it would be fraud and the employer could face a criminal record and up to 10 years in custody.

For further information or advice please contact James Constable in our Dispute resolution team on 01753 889995 or james.constable@bpcollins.co.uk

James Constable

James Constable

Tel: 01753 279039 | 07341 566327

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