How to Protect Your Business from Furlough Fraud Liability

Posted on 28th April 2022 at 20:02

Furlough frauds and how to avoid them

The furlough scheme introduced by the UK Government was devised to help businesses through the pandemic lockdown and uncertainty. It involved the Government paying cash grans of 80% of the wages of furloughed employees. This scheme was extended for the winter months, with taxpayers making up 60% and employers contributing 20% towards wages.

What are furlough frauds?

Simply put this is when an employer deliberately claims back the wages under this retention scheme for an employee, who they know continuously carried out work for them. They claim for days or hours that the employee was actually working.

On an even more serious level, fraud can also take the form of employers claiming money back for fictitious employees or employees no longer in service with them. Another form of fraud is where the employer asks the employee to take a pay cut beyond 80% but still claims the maximum furlough grant.

Basically, claims made for employees working more than what is recorded with the HMRC on flexible furlough is considered a furlough fraud. For example, if an employer records an employee as working two days of the week and on furlough for three, but in actuality the employee works all five days then it is a fraud.

Mistakes can happen

Sometimes, these things can happen without the top management knowing. An over enthusiastic manager can opt to make those under him continue working, despite the management putting the employee on flexible furlough. In cases such as these, the company should put in place a system where employees feel confident to let the top management know.

The HMRC does appreciate that mistakes can happen and that wrong claims can be submitted based on a genuine error, and in such cases all possible help will be provided to assist with sorting out the error. However, in the case where a deliberate fraud is noted the HMRC has civil and criminal powers to follow up and to take necessary action.

How to avoid unintentional furlough fraud

As mentioned above, first and foremost have a system in place where employees can communicate freely with management, to avoid data mix ups.

Second, seek the help of professionals who can explain the scheme in detail to you, and how it applies to you or your company. Ensure that you follow the advice accurately and make the claims according to the correct requirements and guidelines. Details and guidelines regarding the furlough scheme are available on the HMRC site. Conduct regular spot checks to make sure that the claims you are submitting are genuine.

In these uncertain times it is up to you to ensure that you make use of all the concessions given by the government to help your business survive this ongoing global pandemic and its repercussions. By enlisting professional help, you will be taking the right step towards avoiding unnecessary complications and delays.

Get in touch with us for help in compiling the necessary documentation for furlough claims as we have a team of professionals experienced in handling such data documentation for year end compliance Bexley. By giving the correct the documentation and details from the onset you can avoid the possibility of being checked up on by the HMRC for furlough fraud.

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