The Coronavirus Job Retention Scheme (CJRS) is a temporary Government initiative that allows employers access to financial support from the Treasury to pay part of their employees’ wages. The demand for the scheme, commonly known as the furlough scheme, has been high; during the peak of the pandemic in May 2020 it was supporting a total of 8.9 million jobs across the UK, making it the largest wage support programme in UK history.
With this high demand for support, many allegations of fraud against companies has followed. It has been estimated by HMRC that since the start of the furlough scheme in March 2020, some £3.5 billion has been incorrectly claimed by employers.
Misuse of the furlough scheme
While most employers will not have purposefully made false claims under the furlough scheme, HMRC has nonetheless made clear that it will be diligent in issuing fines and penalties for companies who are found to be in misuse of the scheme and will investigate cases of potential fraud.
Timing is crucial in cases of CJRS misuse, so it is important to seek legal advice from a specialist immediately if you are not confident that your business’ furlough claims are accurate.
For instance, how do you know your employees weren’t working when they were supposed to be on furlough? Do you know what amounts to work for the purposes of the furlough scheme? For example, were employees answering business calls or emails whilst on furlough? If you can’t answer these questions, you may be liable to an interpretation of misuse.
When does this become furlough fraud?
Furlough fraud is defined as an employer deliberately claiming back wages under the CJRS for an employee that they know is still carrying out work for them/the company. HMRC also classify the following as furlough fraud:
- Claiming furlough for employees that do not qualify for the scheme,
- Claiming too much furlough for an employee,
- Deliberately providing incorrect information when making a claim to HMRC; and
- Not paying the full amount received from HMRC to the furloughed employee.
I think I may have made a mistake with my furlough claims. What do I do?
Your first step if you are concerned about your business’ use of the CJRS is to consult a legal professional as soon as possible. By consulting an expert lawyer now, you could avoid a sizable fine or penalty in the future and your company’s name being publicised by HMRC for a breach of the CJRS.
Additionally, unlike other professional service providers, legal advice is covered by legal professional privilege, which protects confidential communications, and evidence of these communications, between a lawyer and their client.
It is important that you choose a specialist that will be able to assist you in all areas. As a full service law firm, Kuits takes a holistic approach to looking after client matters, allowing us to provide the best service we can. We have specialists in the areas of law which are most prevalent for these issues: Employment Law, Tax Investigations and Business Crime.
Our Employment Law specialists have been advising clients throughout the pandemic on all matters related to workforce, furlough and redundancies. They are familiar with the legal framework on furlough and will be able to talk you through any potential claims brought against you by HMRC. They will offer clear, pragmatic and jargon free advice to you, so there will be no confusion on the next steps for you or your business.
The Tax Investigations team is headed up by Executive Partner Robert Levy and includes the firm’s business crime specialist, Wendi Bussin. The team has years of experience in defending clients against claims made by HMRC and thoroughly understand it’s work practices; because of this, we have a high success rate in the representation of clients in investigation cases.
What are the next steps I should take?
If you are concerned about your company’s use of the Coronavirus Job Retention Scheme and would like legal advice to understand your issues more, or have received any communication from HMRC in relation to potential or actual misuse of furlough, please contact our Head of Employment Kevin McKenna on 0161 838 7851 or email firstname.lastname@example.org.
Webinar – Furlough: did you get it right?
On 27 May 2021 Kuits furlough experts, Robert Levy, Kevin McKenna, Wendi Bussin and Claire Treacy answered the key business questions on the Coronavirus Job Retention Scheme, commonly known as the furlough scheme.
The team discussed everything from the common misconceptions with furlough, ongoing business risks, and the consequences of misusing the CJRS and the severe risks if you don’t seek legal advice quickly.