The Financial Times reported (9/7/2020) that HMRC have arrested one individual suspected of a wide range of tax-related offences and money laundering, and also for an alleged £495,000 furlough fraud, in a blaze of publicity. It would seem that this was part of a long-running wide HMRC Fraud, involving other arrestees and that the furlough fraud was uncovered as a result of the original investigation.
We have written about COVID-19 related furlough fraud (see article here) and the forthcoming provisions of the soon to be enacted Finance Act 2020.
In essence, this arrest is a preparatory warning that HMRC will criminally investigate large scale furlough fraud. Please also note that HMRC are also pushing for 10-year sentences of imprisonment for criminal convictions of this nature.
The 2020 ACT will allow for self-reporting of mistakes and even lower value fraud within, currently, a 90 day moratorium period which will run from the day that the mistake or fraud has been discovered or from the date that the statute has been passed.
There will be a high penalty to pay (100%) and the full sum is expected to be paid within that 90 day period.
The time to act is now, check all furlough payments have been made in accordance with the strict and clear criteria published by the government at the relevant time, if there has been an error or fraud be prepared to self-report, demonstrating clearly within the money audit trail exactly what has happened to that money.
An additional factor to be considered is instances of furloughed employees forced to work during their furloughed period, thousands of whistleblowing complaints are to be expected from those employees and in particular those made redundant after the furlough period has ended.
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