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Employers urged to act to avoid furlough fraud charges

Employers across Yorkshire are being urged to check their use of the furlough scheme amid growing evidence of fraud uncovered by HMRC investigations.

Regulatory lawyers warn that company bosses face heavy fines and possible prison sentences if they are found to have committed fraud as a result of breaching the strict rules of the Coronavirus Job Retention Scheme (CRJS).

As the CJRS starts to wind down ahead of its closure at the end of October, some reports suggest that more than 60 per cent of furloughed employees have spent time working for their employer in breach of the CJRS rules. It is also reported that more than 4,000 furlough fraud cases have been reported to HMRC by employees themselves.

Jeremy Scott, head of Regulatory at Yorkshire law firm Lupton Fawcett, said: “HMRC is under pressure to recoup some of the huge sums paid under the CJRS. It has indicated it is not trying to catch employers out, which suggests inadvertent breaches of the scheme rules are not a priority.

“However, employers should audit their use of the scheme to identify any mistakes made and address them proactively.”

Jeremy commented that abuse of the CJRS, and therefore potential offences of fraud, include employers:

  • furloughing staff but asking them to work still;
  • registering staff as furloughed, but not telling them and claiming the CJRS grant;
  • claiming the grant for ‘ghost’ employees (made up names or former workers);
  • using the furlough grant for something other than business purposes.

Jeremy added: “If found guilty of furlough fraud, employers could face prosecutions, huge fines, criminal records and prison time for directors.  This is not to mention the reputational damage to businesses found guilty of fraud.”

Lupton Fawcett’s award-winning Employment team, and the nationally recognised Regulatory and Corporate Defence team, have combined to provide specialist advice and support covering all aspects of furlough and furlough fraud.

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