How to handle furlough fraud and mistakes 

27 June 2020 

Ezekiel Ward

As one employee recently stated to the Guardian newspaper:

 

Knowing that my company is fraudulently making us work while taking money from the government is really impacting my mental health. If I don’t work I lose my job and cannot pay my bills. If I report the company, and the government stops paying my company, I might be the reason people don’t get paid.

 

This quote sums up nicely the ‘rock and a hard place’ situation people are finding themselves in. And it’s a dilemma that is almost certainly widespread. Significant numbers of reports of abuse were received by HMRC (ca 800 already in May). There are around 9 million UK employees who have been part of the Coronavirus Job Retention Scheme (CJRS).

 

The rules contained in the Coronavirus Act 2020, related Treasury Directions and CJRS guidance make it perfectly clear that an employee making use of the scheme is to stop working. But - through genuine mistakes, wilful ignorance or active abuse - companies will have gotten things wrong.

 

There are plenty of creative ways to abuse the schemes. From inflation of the basis for furlough claims, evading the qualification exclusions, to claiming payments and asking employees to carry on working, And mistakes will of course happen. Big organisations had to react very quickly earlier this year, and one can easily imagine details being missed.

 

HMRC has said it will tackle abuse and follow up aggressively, though a short grace period will be allowed for correcting mistakes.

 

This is why we at NorthStar have developed a furlough fraud risk management library, showing:

 

  • frauds that could have been committed;

  • typical red flags; and

  • ways to identify abuses.

 

We’ve also developed thinking around how best to justifiably quantify mistaken or fraudulent claims over a population of employees. And we’ve put together a process for how to handle projects.

 

If you want comfort that things have been handled well, have received whistle blowing reports, or perhaps are expecting enforcement and want to have a good handle on the facts, we are here to help.

 

enquiries@northstarcompliance.net

 

©2020 by North Star Compliance Ltd.