08/12/23

Furlough Fraud Investigations | Coronavirus Job Retention Scheme

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One of the Financial Schemes introduced by the Government in an attempt to combat some of the hardship arising from the Covid Pandemic was the Coronavirus Job Retention Scheme (‘CJRS’) also known as ‘the Furlough Scheme’ which enabled qualifying employers to claim cash grants worth up to 80% of wages, capped at £2,500 a month per worker.

Millions of people across the UK benefited from the Furlough Scheme, with businesses using it to ensure staff kept their jobs whilst many businesses were closed.

It is now alleged by HMRC that the system was abused by some rogue employers in order to derive benefits to which they were not entitled claiming:

  • payments for non-existent or dismissed employees,
  • for employees who continued to work during lockdowns,
  • exaggerated hours worked by employees.

It is estimated that the Revenue lost, as the result of fraudulent use of the Furlough Scheme, up to £7.3bn.

Investigating fraud and error arising from the various Government covid financial schemes has become a priority with the establishment of the Taxpayer Protection Taskforce (the “Taskforce”).

Where Furlough payments have been claimed incorrectly, out of an honest error, the Taskforce generally requires that only the overpayment should be returned, without criminal action being taken.

However, HMRC exercises its enforcement powers to penalise employers who have deliberately abused the Furlough Scheme.

Naz Maqsoom of KANGS outlines the investigatory and enforcement powers available to HMRC.

The Team at KANGS has vast experience and is highly regarded nationwide for assisting clients facing financial investigations and prosecutions of every nature, including those conducted by HMRC.

Our Team is led by Hamraj Kang, recognised as a leading expert, and one of only two solicitors nationally to be ranked as a ‘Star Individual’ for eight consecutive years in the legal directory Chambers UK.

Other members of the Team are also ranked in Chambers UK as well as The Legal 500.

For an initial no obligation discussion, please call our Team at any of our offices detailed below:

Investigatory and Enforcement Powers | KANGS Covid Fraud Defence Solicitors

Investigatory

Where the Taskforce suspects the CJRS has been used fraudulently, HMRC or the National Crime Agency (‘the NCA’) can:

  • search business premises, often as part of a Dawn Raid,
  • order the business to surrender business records, communications and documents it thinks may become relevant to the investigation,
  • carry out searches on individuals,
  • make arrests,
  • interview suspects under caution,
  • recover proceeds of crime, and
  • freeze suspected wrongdoer’s bank accounts.

Enforcement powers

The Taskforce’s primary objective is to recover money incorrectly paid out. Where a business is unable to make repayment HMRC may require the company directors to personally repay it.

Any finding of fraudulent activity is likely to have a serious impact on a business’s reputation which may be aggravated by HMRC publishing details of complicit businesses.

HMRC can also seek director disqualification, confiscation of the proceeds of fraud and imposing financial penalties up to the value of the CJRS payment fraudulently received.

Criminal proceedings

Fraud is a serious criminal offence and a business which has defrauded the CJRS could face charges of:

  • fraud by false representation,
  • fraud by abuse of position,
  • fraud by failure to provide information,
  • cheating the public revenue, and
  • conspiracy to defraud.

HMRC and the NCA have powers to prosecute companies and/or directors suspected of criminal conduct.

Those convicted can expect to receive fines, imprisonment and, where there exists a suspected link to a Serious Criminal Organisation, a Serious Crime Prevention Order may be sought which, if granted may impose restrictions on:

  • financial or business dealings,
  • work arrangements,
  • communications and associations,
  • premises which can be used,
  • use of a specific item, and
  • domestic or international travel.

How Can We Help? | KANGS National Criminal Defence Solicitors

Whether you are being investigated by HMRC, the NCA, or any other prosecuting authority, KANGS provides advice and representation from the outset of your case through both criminal and civil HMRC proceedings, to both companies and directors/official officers.

We can assist on all aspects including:

  • Advice and representation at dawn raids,
  • Representation at interviews under caution, whether voluntary or under arrest,
  • Deployment of our 24-hour Rapid Response Team,
  • Liaison and negotiation with all authorities, including HMRC and the NCA,
  • Advice on Financial Restraint Orders and Cash Seizures,
  • Defence through all criminal and civil courts.

It is essential that you seek professional advice as soon as you become aware of any potential investigation or prosecution.

If you need urgent assistance, call our 24/7 Rapid Response team on 07989 521210.

If your enquiry is not an emergency and we can be of assistance, our Team is available via:

Telephone: 0333 370 4333

Email: info@kangssolicitors.co.uk.

We provide initial no obligation discussion at our three offices in London, Birmingham and Manchester. Alternatively, discussions can be held virtually through live conferencing or telephone.

Hamraj Kang

Hamraj Kang
Senior Partner

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Tim Thompson

Tim Thompson
Partner

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Nazaqat Maqsoom

Naz Maqsoom
Associate

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