Lawyers are warning businesses to have documented evidence of their furlough claims, despite the Treasury writing off more than £4billion in furlough payments  that were made during the pandemic. 

HMRC says almost £6 billion was paid out to fraudsters using the Coronavirus Job Retention Scheme (CJRS) and the self-employed income support scheme (SEISS).

So far, a taskforce to recover the money has got back £500 million with an expected £1 billion by the end of next year (2023).

Employers were able to claim up to 80 percent of employees’ wages though the CJRS from March 2020 until September 2021 if they were affected by the Covid-19 lockdowns. The scheme protected 11.7 million jobs and it is reported 1.14 million employees were still on the scheme in September 2021.

Speaking to MPs Shadow chief secretary to the Treasury, Pat McFadden told MPs that the government was “giving up easily” and called on HMRC to investigate where the money went and how it was allowed to be stolen by fraudsters.

Treasury minister John Glen defended the decisions, saying the schemes were created, refined and implemented very quickly. 

 

Warning to businesses

Regulatory lawyers at Constantine Law warn that business owners and finance teams  need to still be aware of their claims and self-report, return funds and resolve the situation if they have made a mistake.

Sarah Wallace, partner at Constantine Law says, “We urge businesses not to be lulled into a false sense of security from reports that the Treasury is writing off the fraudulent or mistaken payments. Even if attempts are made to recover 26%, that is still over £1 billion to chase, which is a substantial amount. Businesses need to get their affairs straight as soon as possible to avoid any disastrous ramifications.”

Constantine Law says that now would be the time to reconsider whether any claims made was legitimate and to document that decision. 

The law firm also warns that any businesses getting ready for a possible sale in the next few years should get ‘their house in order’ to avoid delay in the sale and remove the opportunity for the buyer to push for a lower price. 

An HMRC spokesperson said: “The government has invested over £100m in a Taxpayer Protection Taskforce of 1,265 HMRC staff to combat fraud on the HMRC Covid-19 schemes, one of the largest and quickest responses to a fraud risk by HMRC.”