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Whistle-blowers play key role in crackdown on furlough fraud

Makbool Javaid, Partner - Simons Muirhead & Burton

HMRC has received 13,775 whistle-blower reports regarding fraud against the furlough scheme, with more people reporting their employers and ex-employers to the authority. City A.M. reports that HMRC is now stepping up its enforcement activity with a view to recovery, issuing penalties and pursuing prosecution or directors’ disqualifications where appropriate.

This could include instances when it considers businesses were claiming furlough but telling, or allowing, employees to keep working. It could also include instances where a past fraud has been uncovered but the business has not come forward to rectify the position.

The sheer number of furlough claims at the height of the pandemic – and the need to make the payments immediately – made it very difficult for HMRC to spot fraudulent claims. As part of a process of encouraging whistle-blower reports from employees, HMRC has deliberately made information about whether an employer has made a furlough claim available online.

Employees are increasingly using this information to make fraud reports through HMRC’s digital reporting service. Directors or business owners found guilty of furlough fraud can face significant penalties, including being made personally liable to repay the overclaimed furlough funds and custodial sentences.

Should a breach be found, business owners should seek advice on how best to quantify and voluntarily engage with HMRC to repay the funds.

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