Joshua Leigh & Co

Furlough fraud warning after arrests

Employers have been warned that businesses abusing the furlough scheme will face action from fraud investigators.

It comes after two people have been arrested by H M Revenue & Customs (HMRC) officials over a suspected £3.4m Coronavirus Job Retention Scheme (CJRS) fraud.

In March, the Government announced it would invest £100m in a Taxpayer Protection Taskforce to combat fraud linked to Covid-19 support measures.

The man, 35, and woman, 36, from Bradford, were also interviewed in relation to a suspected multi-million-pound tax fraud, officials said.

More than £6m held in bank accounts controlled by the pair has been frozen by HMRC.

Both were held on suspicion of cheating the public revenue, VAT evasion and money laundering. They have since been released under investigation.

The Coronavirus Job Retention Scheme (CJRS), commonly called the furlough scheme, was launched in March 2020, at the start of the coronavirus crisis, to minimise unemployment.

Furlough defines those who break the rules laid out under the CJRS in place since March 2020. The scheme was designed to help millions of people, but there are certain rules Britons will need to adhere to, such as not working for their company when on the scheme.

However, HMRC has now confirmed two people have been arrested on suspicion of breaking the rules.

The furlough scheme currently covers up to 80 per cent of an employee’s salary for the hours they cannot work, up to a maximum of £2,500 per month.

Janet Alexander, director of the HMRC’s Taxpayer Protection Taskforce, said most employers had used the scheme responsibly.

However, she said: “We will not hesitate to act on reports of abuse of the scheme or any HMRC-administered Covid-19 support packages.”

More than £61bn has been claimed through the CJRS, supporting 1.3 million employers and 11.5 million furloughed jobs.

Last year, a think tank warned that fraudsters could steal billions of pounds by targeting the Government’s Covid-19 financial rescue schemes.

The Policy Exchange think tank report said measures were rushed through to save people and businesses from economic ruin but were vulnerable to scams.

The Government said at the time it was using every tool to prevent and detect fraud, and would pursue those who commit it.

Former Home Secretaries Lord Blunkett and Sajid Javid backed the report.

Fraud and error could cost the Government between £1.3bn and £7.9bn, the report from the centre-right organisation said.