Furlough Fraud: What Can You Do if Investigated by HMRC

4th April 2022 Business Crime

In 2021, HMRC declared that an estimated £5.8bn of the furlough allowance available to businesses was lost due to fraud or mistakes in the system. Subsequently, it was reported that 13,000 businesses were being investigated by the government’s Taxpayer Protection Taskforce (TPT), of which had £100m invested. The process is ongoing due to the scale of the issue, and your business may well be one of those investigated. 

Whether due to evidence or the stress of how big the task ahead of the TPT is, if you are a company director and have been accused of furlough fraud, read the following article in which your options will be outlined to you.

In our JMW’s Inside Man video, business crime and regulatory defence lawyer Mike Rainford outlined the steps that can be taken to avoid prosecution in this area.

HMRC’s goals are to question and prosecute company directors (as they are acting on behalf of the company) for furlough fraud, and they will attempt to do this by contacting you about a lawful interview that you must attend.

It will become apparent quickly that you have been called to an interview as you will receive a letter from the Criminal Investigations Department of HMRC. If you receive a letter such as this, you should contact a legal expert - like those at JMW - immediately.

HMRC will want to see certain financial paperwork that may provide evidence of fraudulent intent and activity. You will be invited to a formal police and criminal evidence interview under caution, and they will investigate whether your application was genuine or not.

In combating an accusation like this, evidence is essential. This can come in the form of your furlough application and paperwork to back up your reason for applying. This can then be produced at the interview and should provide answers for questions that will be posed.

As law experts, our goal will be to move HMRC away from criminal proceedings and further accusations. Gaps in evidence will be the primary difficulty HMRC and the police will face, so filling these gaps will make your defence substantially stronger.

Furlough fraud is a serious crime as it is something that could affect people who really need the funding. HMRC has taken measures to minimise the possibility of fraud by investing in automatic application systems, only granting furlough to employees and businesses that they have on record, and using pre-existing knowledge of customer behaviours and compliance. While reducing the risk of fraud, this also affects people’s chances of successful applications, and further fraudulent activity may cause HMRC to tighten these restrictions.

Call our expert team of solicitors now on 0800 652 5559 for advice and representation.

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Mike Rainford is a Partner located in Manchester in our Business Crime & Regulation department

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