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HMRC acts on suspected furlough fraud

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HMRC has reported the arrest of an individual in the West Midlands as part of its investigation into a suspected £495,000 coronavirus job retention scheme fraud. The individual was arrested on suspicion of cheating the public revenue, fraud by false representation, VAT evasion and money laundering, as part of a wider HMRC investigation into an alleged multi-million pound tax fraud.

Richard Las, acting director of HMRC’s Fraud Investigation Service, reminded employers that the CJRS was put in place to protect jobs and that fraudulent claims deprive public services of essential funding, noting that ‘anyone who is concerned that their employer might be abusing the scheme should report it to HMRC online’.

Commenting on the action taken by HMRC, Jessica Parker, partner and specialist criminal litigator at Corker Binning, said that ‘HMRC are sending a clear message to those who are tempted to take advantage of the Chancellor’s furlough package. It is likely that this action will be followed by a publicised amnesty for those who may have claimed furlough payments fraudulently and HMRC will expect that today’s arrest will encourage those who otherwise may have ‘waited it out’ to come forwards. Furlough fraud is rumoured to have been conducted on a large scale and HMRC’s enforcement division will be planning a significant programme to counter it.’

Schedule 16 to what will be FA 2020 will give HMRC powers to claw back CJRS payments made to businesses not entitled to received them, or which have not been used to pay employment costs. Richard Morley, partner at BDO, noted that the Finance Act ‘will trigger the start of the 90-day period for businesses to notify HMRC that they received furlough scheme payments which they were not entitled to receive or retain. Given that HMRC has clearly started to actively follow up on tip-offs and potentially incorrect claims, instead of waiting for the start of the 90-day notification period, businesses and individuals should start reviewing their furlough claims now.’

Issue: 1496
Categories: News