Furlough Fraud Investigation Solicitors

HMRC are actively investigating businesses where there are concerns about furlough fraud.

Businesses are at serious risk of substantial penalties and reputational damage if they are found to have fraudulently accessed the Coronavirus Job Retention scheme. It could even result in criminal action being taken. HY Solicitors are experts in representing businesses under investigation. We have a 100% success rate in protecting our clients from being required to pay penalties or being prosecuted.

Is your business being investigated by HMRC for furlough fraud?

If your business has been contacted by HMRC confirming that it is investigating claims made under the CJRS, it is important that you receive legal advice at the earliest opportunity. We will proactively advise your business at all stages of the process, and most importantly in relation to challenging the accuracy of HMRC pre-assessment calculations and mitigating the risk of penalties.

Understand the risks to you and your business

HMRC are actively investigating businesses where there are concerns about furlough fraud. Businesses are at serious risk of reputational damage, penalties and criminal action. HMRC are able to levy penalties up to 100% of the overpayment claimed.

Get help with your furlough investigation today

Understand the penalties you and your business could incur

Depending on your circumstances, HMRC can fine you upto 100% of your CJRS claims. In addition the management of your company could be jointly and severally liable to repay that amount to HMRC. Company directors and managers are at risk of criminial allegations of furlough fraud.

HMRC has recently released guides to help businesses understand the consequences of being found guilty of furlough fraud.

  • An errors guide - setting out guidance on what an employer should do in the event of an application error leading to overpayment

  • A penalties guide - an overview of the penalties an employer could face if they have over-claimed. Penalties may be imposed at 100% of the overpayment where the employers failure is shown to be deliberate or was concealed

What is furlough fraud?

The Coronavirus Job Retention Scheme (known as Furlough) enables an employer to claim a grant from HMRC to cover the wages of its employees that cannot work due to Coronavirus.

Examples of Furlough fraud can be:

  • Undeclared overpayments
  • Use of the grant for anything other than paying employee wages
  • Reducing wages below the amount claimed
  • Requiring staff to undertake work when part of the scheme
  • Claiming for workers no longer in employment by the business

If you are actively being investigated by HMRC for furlough fraud, it is important to obtain legal representation immediately.

Having the HY team on your side from the outset will stand you in good stead to protect your business and yourself.

What is a Furlough Fraud Audit and how can it help?

Have your furlough claims audited by our legal experts

A Furlough Fraud Audit has been exclusively created by HY Solicitors to help businesses, and directors, understand if their approach to the Coronavirus Job Retention Scheme has been correct.

We will audit your approach, and provide you with a summary of how appropriate your processes have been. For businesses that have approached the Furlough Scheme correctly it will give you peace of mind, whilst companies who have made mistakes can then approach HMRC to discuss the errors. HMRC are known to look favourably upon businesses who approach them with issues, rather than HMRC unearthing them.

As the audit will be completed by a regulated solicitor the documents from the audit will be priviledged.

Who are HY Solicitors?

HY are a specialist business to business law firm that focus on Employment and Commerical law. Headed by Barrister Dean Hulse and Solicitor David Yazdi, HY help businesses of all sizes tackle complex issues.

Our ethos is to challenge the practices typically adopted by the traditional law firm with the aim of delivering a more specialised brand of legal services. This includes an array of legal products designed to meet certain challenges head-on or to provide solutions for our clients.

Our Furlough Fraud services draw on specialists from both the legal, accountancy and tax sectors. The issus around the CJRS span all three areas, so having a team that includes solicitors, barristers, accountants and employment tax specialists will allow you to defend and protect yourself.

David Yazdi Director & Solicitor

Corporate, commercial and employment law solicitor assisting clients in making key decisions

Dean Hulse Director & Barrister

Regulatory crime and employment litigation specialist

Paul Barnes Chartered Certified Accountant

Entrepreneurial Chartered Certified Accountant who helps clients make sense of tax challenges

Abusina Qureshi Technical Partner

Employment Tax Specialist, who helps clients solve complex HMRC-related issues

Furlough / Coronavirus Job Retention Scheme FAQs

What powers do HMRC have?

HMRC has a multitude of powers when it comes to investigation. They can apply for a warrant to search the business premises for material that they believe has value to the investigation, apply for a production order which would force document owners to hand over their documents. If HMRC suspect that furlough fraud has been commited they can interview individuals under caution, and they can arrest and detain an individual for that interview, or invite an individual to be interviewed at a time and place of their choosing

What should you do if HMRC are investigating you?

Seeking professional support as soon as possible will give you the best chance of a positive outcome. HMRC generally favour businesses when they are honest about mistakes, and they equally look favourably on businesses that approach HMRC to highlight potential issues

How seriously are HMRC taking the issue of Furlough Fraud?

HMRC have stated that they have formed of a team of 1,000 investigators who have been tasked with finding fraud, and they are committing over £100m to tackle the issue.

"We won’t hesitate to take criminal action against the most serious cases. This is taxpayer’s money and fraudulent claims limit our ability to support people and deprive public services of essential funding. Claims are checked and payment may be withheld or need to be repaid if the claim is based on dishonest or inaccurate information. "
- HMRC Spokesperson

What are the criminal offences covering furlough fraud?

There are a number of serious offences for which individuals could be investigated and prosecuted. These include:

  • False accounting
  • Consipracy to defraud
  • Money laundering
  • Fraud by false representation under the Fraud Act of 2006

In addition, your business may be investigated for the strict liability offence of failing to prevent the facilitation of tax evasion. While this is a relatively new offence introduced under the Criminal Finances Act 2017, there are a number of investigations across various sectors currently underway.

What should employers be doing to minimise their risk?

Whether the claims were made as a result of a misunderstanding of the scheme rules, or done deliberately, businesses need to act fast to rectify matters or risk serious consequences.

What size of fine can HMRC issue?

HMRC have said that they can levy income tax charges against a company and they may publish details of businesses who have been found to have deliberately overclaimed. The latter may be damaging to the reputation of a business, if it becomes known that you have been found to have overclaimed from the public purse. Finally, HMRC can issue a penalty of up to 100% of the amount that the business has overclaimed. These three potential penalities, when combined, can have a significant impact on a business, and to some it may force them company to close.

What do I do if I receive a letter from HMRC relating to Furlough and suspected fraud?

If HMRC are considering or actively investigating you, and they inform you via a latter, then the first step is to take the matter seriously. Review the documentation in full; they may ask for supporting information. You should also review the deadline dates that HMRC have issued you with, you may be entitled to request an extension to these dates to give you more time. For more business owners or financial directors it will be important to get independent and priviledged legal advice around the furlough scheme, and how HMRC is handling furlough fraud cases. As the CJRS is new, and the processes aroud investigation and prosecution are also new, it's important to find a a solicitors that has experience around it, and the Furlough scheme in general.

What is the process that HMRC will run when they are investigating a company?

From our experience of the HMRC process for furlough investigations there are four key stages:
  • The company communicating with HMRC regarding pre-assessment calculations.
  • At the pre assessment stage, the investigation will look at why the overpayments were claimed (Was it deliberate or an error).
  • HMRC will then make the assessment of recoverable sums. They will also assess the level of penalty which can be 100% of the overclaimed amount.
  • Once the assessment is raised, there is a right of appeal.