Employment law experts, Langleys Solicitors, says as many as 35,054 Lincolnshire-based employees could be in breach of the Government’s furlough scheme, as businesses have just a week left to correct claims they know to be fraudulent.
Businesses that used the Coronavirus Job Retention Scheme (CJRS) have been given a 30-day window of opportunity, from 1 July, to correct their submissions, however research suggests as many as a third (34%) of employees have been asked to work while on furlough, making their claims fraudulent.
The scheme, first introduced by the chancellor in March to protect jobs during lockdown, has so far been used to save 103,100 jobs in the Lincolnshire region, supporting 78,200 payroll workers and 24,900 self-employed residents.
With 78,200 employees furloughed in Lincolnshire – Boston 6,400, East Lindsey 15,100, Lincoln 10,800, North Kesteven 11,400, South Holland 8,700, South Kesteven 16,800, and West Lindsey 9,000 – as many as 35,054 employees could have breached the terms of the government support.
Kate Hindmarch, partner and head of employment law at Langleys Solicitors, said: “As businesses get ready to welcome their employees back to the workplace, from 1 August, they should also review their use of the Coronavirus Job Retention Scheme to make sure they do not fall foul. Following the speed with which the CJRS was introduced by the Government to minimise the economic impact of the pandemic, it is entirely possible that employers may have not applied the CJRS as it had been intended, and mistakenly made fraudulent claims. However, now is the time to correct these submissions before businesses face serious repercussions – something which could mean the end for already financially-fragile firms.”
Following news of the first arrest in relation to the furlough scheme fraud, Kate Hindmarch, added: “We welcome the crackdown, and the first arrest for abusing the scheme is a good response on behalf of the taxpayer.”
CJRS has been used by 1.1 million employers, to protect 9.1 million jobs with the total value of claims made so far reaching almost £21 billion. Fraud has been alleged by almost 2,000 whistleblowing employees so far, according to HMRC.
The Government has recently published draft legislation that will take effect from Royal Assent of the Finance Bill 2020 and will apply to all payments made under COVID-19 support schemes. The penalty measures outlined in the bill will only apply if the person fails to notify HMRC about the situation within 30 days, or 30 days after the Finance Bill receives Royal Assent if it arose before that.
Ensuring claims are correctly submitted is becoming somewhat complex with the introduction of flexible furlough. Up to July it was clear that employees were not permitted to work whilst on furlough, whereas employers are now able to agree flexible working arrangements with their employees with periods on and off furlough.
Regardless of the complexity of the flexible furlough rules, it is important to ensure the scheme rules are abided by, otherwise employers could face even higher costs due to the enforcement powers of the HMRC.
