HMRC confirms 6k suspected furlough fraud cases are being reviewed – how this may cost you

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Furlough fraud levels may have already reached costly highs over the last year or so but according to new confirmations from HMRC, further abuse could be uncovered over the coming months. In April, as HMRC released official figures, it was shown furlough themed fraudulent activity rose to just over 26,000 and this was on top of dire warnings issued in late 2020.

In late 2020, Meg Hillier, a Chair of the Public Accounts Committee, warned the “hasty” roll out of CJRS could have led to billions being lost from Government coffers due to fraud and/or negligence.

Ms Hillier said at the time: “Our finding of the astonishing lack of economic planning for a pandemic shows how the unacceptable room for fraud against taxpayers was allowed into the Government’s hastily drawn up economic support schemes.”

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Rishi Sunak appeared to acknowledge fraudulent activity posed a problem in his March Budget, as the Chancellor vowed to act.

As Mr Sunak detailed in March: “We’ll also tackle fraud in our Covid schemes, with £100million to set up a new HMRC taskforce of around 1,000 investigators as well as new measures, and new investment in HMRC, to clamp down on tax avoidance and evasion.”

READ MORE: Bank announces ‘significant rate rise’ on savings account

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Mr Norman responded with the following: “A total of 1.3 million employers have claimed under the furlough scheme (Coronavirus Job Retention Scheme, CJRS) and 11.6 million employments have been put on furlough for at least part of the duration of the scheme. These figures are based on CJRS claims received by HMRC up to June 14 2021.

“Employees may be on furlough from more than one employment, in which case they would appear in these statistics for each job from which they are on furlough.

“HMRC have opened 6,150 inquiries into suspected overpayments due to error or fraud as of June 30.

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“This figure refers to any cases open where HMRC believe there has been fraud or an error which requires HMRC intervention.”

These numbers may rise over the coming weeks as furlough claims for June 2021 must be made by July 14 and overall, the scheme will be winding down into September.

Workers and businesses may see additional furlough pressures from now until Autumn, as employers are required to contribute more to the wages and costs of furloughed staff.

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As a result of this, many expect a wave of redundancies may hit workers as the UK moves into the Autumn months.

This may be especially true for certain industries that have been hit hard by the pandemic such as hospitality and Laura Kearsley, a partner and solicitor specialising in employment law at Nelsons, broke down the tough decisions employers must start facing.

Ms Kearsley said: “Faced with uncertain trading times for many businesses and now partial financial responsibility for all employees, many employers will need to review their workforce and requirements to consider whether current levels of staffing are sustainable.

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“If an employer intends to make more than 20 people redundant, this triggers collective consultation requirements, including minimum consultation periods during which redundancy dismissals cannot take effect. The consultation period for employers who anticipate making 100 or more people redundant is 45 days and for those anticipating making between 20 and 99 redundancies it is 30.

“For employers who are concerned about the changes to the furlough scheme, they need to think carefully about whether they want to commence redundancy consultations now so that they are in a position to make redundancies before the government funding reduces – rather than waiting until that point to start consultation and being faced with employment costs during the consultation period.

“As well as complying with the requirements of collective consultations (which include liaising with recognised trade unions or elected employee representatives), employers that are making any number of employees with more than two years’ continuous service redundant will need to adhere to minimum requirements in terms of consultation and meetings – this could be challenging in the coronavirus lockdown.

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“We cannot emphasise enough the importance of planning ahead wherever possible, particularly now employers have a much clearer idea of what their contributions to employees need to be and when the CJRS will end.”

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