Government and whistleblower charities report fraudulent use of furlough scheme
Both government and whistleblowing organisations are reporting fraudulent use of the furlough scheme. At the end of may HMRC said it had received almost 1,900 reports of fraudulent use; and whistleblowing organisations had received thousands of calls from employees claiming they have been asked to work while on furlough, against the rules.
HMRC has now published draft details of changes to the Finance Bill 2020 that will give it powers to hold directors liable for tax charges if they deliberately flouted the rules of the Coronavirus Job Retention Scheme. HMRC will have powers to make a company officer jointly and severally liable for the Income Tax charge raised in relation to any payment to which the company was not entitled or to which was never intended to be used to pay furloughed employee. HMRC has also said that companies caught abusing the scheme will be asked to repay money, and could face criminal action. It is asking furloughed staff to report if they are undertaking work for their employers in contravention of the scheme’s current eligibility criteria.
Meanwhile, according to whistleblowing charity Protect, 36 per cent of coronavirus-related calls taken by its advice line since the pandemic started have involved claims of employers fraudulently taking advantage of the government’s coronavirus job retention scheme. This included making staff continue to work despite being paid through the scheme, or by furloughing staff still working without their knowledge. More than a quarter of calls came from workers in the hospitality sector, while nearly a fifth were from retail staff. Protect said complaints from these sectors usually made up just two and four per cent of their call volume respectively, suggesting the problem was particularly prevalent in these industries. Another charity, WhistleblowersUK, also recently reported a rise in calls on this issue, saying up to a fifth had been from employees in the care sector.