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Accountant and director arrested for £70,000 furlough fraud

An accountant and company director were detained on Thursday (10 September) on a suspected £70,000 case of Coronavirus Job Retention Scheme (CJRS) fraud following an HMRC investigation. 

11th Sep 2020
Staff Writer AccountingWEB
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 A Metropolitan Police officer standing beside a van at a nearby incident in a suburban street in Greater London.
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Today, HMRC announced the arrest of two people in London on suspicion of furlough fraud as part of its investigations in order to crack down on abuse of the Coronavirus Job Retention Scheme (CJRS).

A 43-year-old male accountant and a 51-year-old female company director were taken in on suspicion of fraud by false representation and money laundering. The accountant was also accused of fraud by abuse of position.

They have now been released under investigation – digital devices and business records have been seized.

“The CJRS is part of the collective national effort to protect jobs,” said assistant director of HMRC Fraud Investigation Service Terry Braithwaite. 

“While most employers have used the scheme responsibly, this is taxpayers’ money and HMRC will not hesitate to act on reports of abuse of the scheme.”

HMRC investigates “high risk” CJRS fraud

In Monday’s televised virtual hearing HMRC’s chief Jim Harra revealed that between 5% and 10% of the £35.4bn furlough grants – around £3.6bn – could have been paid out as a result of deliberate fraud or error.

Over the last six months, over £35.4bn in CJRS has been paid out by HMRC in coronavirus support funding to 1.2m employers for 9.6m furloughed jobs. As part of HMRC’s investigations into CJRS fraud, 27,000 “high-risk” cases where organisations are believed to have over-claimed under the scheme are currently being investigated. Several CJRS arrests have already been made, with the first taking place in Solihull on 10 July. 

Many businesses are already under review for potential investigation, but “just because a firm has not yet received a letter does not mean that they won’t get one shortly,” commented Blick Rothenberg’s Fiona Fernie.

“As the furlough scheme comes to an end and people lose their jobs, many disgruntled employees may turn on employers who they know abused the scheme. HMRC is encouraging anyone who feels their employer may have been fraudulently claiming furlough to report it,” she added.

AccountingWEB users have also been discussing suspected fraudulent practices regarding the scheme.

Fraud hotline heats up as staff are shed

HMRC has already received over 8000 calls on its fraud hotline claiming abuse of the system, in addition to its own risk analysis techniques to identify potential abuse – 27,000 of which have been considered a risk of serious error.

“The CJRS payments have kept people in employment beyond lockdown but reports suggest that now that it is coming to an end 60% of mid-size businesses are looking to shed staff,” said Fernie.

“Now is the time for companies who have over claimed to come clean even if it was in error and get their house in order before that letter drops onto the mat or they get an enquiry email – because at that point they will be under investigation.”

Although primarily focused on fraudulent uses of the scheme with no current intentions to pursue erroneous claims due to the circumstances, Harra has made it clear that HMRC expects employers to check their own claims and repay any excess amount made in error. 

As a result, questions are now being raised as to whether those who fail to make CJRS checks or do them correctly will effectively become fraudulent users of the scheme, and will be in line for later investigation by HMRC.

Replies (17)

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By tom123
12th Sep 2020 10:43

Not really sure what checking your own claims means.

I have kept all my spreadsheets, but really don't want to repeat all the work to see if I get a different answer this time.

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By AWeb72
12th Sep 2020 12:16

Even more so with part time furlough!

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Replying to tom123:
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By Wilson Philips
12th Sep 2020 20:18

I would suggest that it means exactly what it says. If you’ve made a claim, or an accountant has done so on your behalf, you might want to check it - especially if it is large. If you don’t, and HMRC subsequently discover that you’ve overclaimed, you’re potentially opening yourself up to harsher treatment.

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By johnjenkins
14th Sep 2020 09:42

I've looked into this and my view is quite simple. Unless I have missed something glaringly obvious, any fraud within CJRS is going to be picked up. So how do those that commit these frauds hope to get away with it. The loan scheme and SE could be a different matter though.

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By ds
14th Sep 2020 12:10

I think they try it on hoping to get away with it due to suspected HMRC incompetence and delays. If they get found out then for small claims, jail is very unlikely and a penalty is probably the worst fate for medium size fraud. For the big frauds, I expect they will scarper quickly to ancestoral homes etc.

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By Rgab1947
15th Sep 2020 09:43

Now, now, fraudsters are not just from one element of society. Plenty working class are crooks too.

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By ds
14th Sep 2020 12:06

The photo at the head of this article shows some Met Police armed bobby. Are they expecting the arrest of some accountant and his wife to end in a shoot-out or hostage situation? Strange times indeed.

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By AnnAccountant
14th Sep 2020 17:51

I think Gen Z like to create the impression of as much drama as possible. They were brought up motivated by clicks and likes -rather than honesty and integrity.

Mind, as it goes, since I have licensed firearms at home, a visit from the police investigating any naughtiness is likely to be by a tooled up officer because they don't know for certain whether I'll go mad and start a shootout. Don't call a hotline - I won't! - and I haven't made any furlough claims.

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By Survivor
15th Sep 2020 10:54

I bet your clients pay on time :)

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By Ruddles
15th Sep 2020 16:31

The subject matter of this thread must have struck a chord with you ;¬)

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By AndrewV12
15th Sep 2020 09:56

Extract above
'A 43-year-old male accountant and a 51-year-old female company director were taken in on suspicion of fraud by false representation and money laundering. The accountant was also accused of fraud by abuse of position.'

ASSUMING THE CHARGES MADE ARE CORRECT , There is always one or two who cannot help themselves and have to go for the jackpot, no names mentioned yet.

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By bobsto12
15th Sep 2020 09:57

Given covid is a national emergency anyone who has tried to take advantage and commit fraud deserves to be thrown in jail.

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By BryanS1958
15th Sep 2020 10:12

Correct on which day and which version of HMRC rules and calculator?

We have hundreds of calculations and had a very limited amount of time and staff available to spend on the exercise. Are my clients going to thank me and pay for for spending additional time to check whether the calculations are correct? I have my doubts.

I am writing to my clients to offer them the option for us to double check and correct if necessary - at their cost.

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By Mr J Andrews
15th Sep 2020 16:21

Phew; the picture looks just like my house frontage. But then I saw the house number !
Can't wait to see the scumbags named , shamed and hopefully banged up.

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Replying to Mr J Andrews:
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By Ian McTernan CTA
16th Sep 2020 12:14

I'd like to wait until they are actually convicted of anything before being 'named, shamed and hopefully banged up' as this country supposedly still operates on 'innocent until proven guilty'- although not apparently with the social media generation who convict without evidence..

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By jamiea4f
16th Sep 2020 14:16

I'm sure there'll be more, people can't help themselves when it comes to "free money".

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Replying to jamiea4f:
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By ds
17th Sep 2020 10:16

Especially the government !

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