Furlough Fraud: £3.5 billion Coronavirus Job Retention Scheme claims were fraudulent or made in error

The latest data from HM Revenue & Customs (HMRC) has revealed that up to £3.5 billion in Coronavirus Job Retention Scheme (CJRS) claims were either fraudulent or paid out in error.

HMRC informed the Public Accounts Committee that they believe that up to 10 per cent of furlough claims have been awarded incorrectly.

The Government has paid out £35.4 billion through the furlough scheme since its introduction, with workers placed on furlough leave receiving 80 per cent of their wages up to a cap of £2,500 per month via the CJRS.

Approximately 9.5 million people have been placed on furlough leave at some point since its introduction, and HMRC is now looking to crack down on employers that have committed ‘furlough fraud’.

As per the conditions of the CJRS, if an employer has asked an employee to carry out any work whilst on furlough leave, then they will need to prove that whatever they asked them to do was neither;

  • Making money for them or any other businesses that may be linked, or;
  • Providing services to them

Jim Harra, Permanent Secretary at HMRC, said: “What we have said in our risk assessment is we are not going to set out to try to find employers who have made legitimate mistakes in compiling their claims because this is obviously something new that everybody had to get to grips with in a very difficult time.

“Although we will expect employers to check their claims and repay any excess amount, what we will be focusing on is tackling abuse and fraud.”

HMRC has received more than 8,000 calls to its fraud hotline, and they are now looking into 27,000 cases in which they believe a serious error has been made in the value of the furlough claim.

The Coronavirus Job Retention Scheme is due to end on 31 October 2020, with employers being advised to begin preparations for employees to either return to work or to make any redundancy considerations.

For help and advice on matters relating to employment law, contact our expert team today.

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Joanna Alexiou

Joanna Alexiou

Associate Solicitor at Mackrell.Solicitors
Joanna joined the firm’s Employment Law team in February 2020 having previously worked at another prominent firm of solicitors in the heart of London. Joanna has worked with clients from the finance, technology, arts and culture, marketing, charity and food and drink sectors.