HMRC has made an arrest for a £495,000 violation of the furlough scheme

A 57 year-old man from the West Midlands town of Solihull has become the first person to be arrested for fraudulent use of the government’s furlough scheme. The fraud is thought to account for £495,000. 

The man was arrested by officers from HMRC – the department responsible for overseeing the furlough scheme – and his digital devices were seized and his bank account frozen. A further eight people were arrested across the West Midlands as part of this investigation which deployed 100 HMRC officers to 11 locations.

Furlough fraud isn’t the arrested man’s only suspected crime – his arrest was also related to a multi-million pound VAT evasion and alleged money laundering offences.

Richard Las, acting director of HMRC’s fraud investigation, said the department “will not hesitate to act on reports of abuse of the scheme.”

He added, “This is taxpayer’s money and any claim that proves to be fraudulent limits our ability to support people and deprives public services of essential funding.”

There are worries that abuses of the furlough scheme might be widespread and that the Solihull case could be just the tip of the iceberg; the Guardian reports that HMRC is currently dealing with 4,400 cases of suspected fraud linked to the job retention scheme.

The government has already paid out £27bn as part of the furlough scheme and will now be trying to claw back as many incorrect claims as possible. 

Experts suggest that the government may not only try to recoup furlough money in cases where claims were fraudulent; they may also attempt to get back the money from claims that weren’t properly completed. 

Given the extent to which the furlough scheme has changed since it was first introduced, there are likely to be many businesses who have inadvertently made incorrect claims.

It is also a good idea to collect detailed evidence about any furlough claims you have made. 

Because HMRC is treating the scheme as taxable, it will be able to investigate the claims for the next four years for an innocent error, six years for a careless error and 20 years for a suspected fraudulent claim. It will eventually be the business’s responsibility to prove to HMRC that their claims for the job retention scheme were valid.