Warning over construction furlough fraud

HMRC has warned that it will take action against firms committing 'furlough fraud' in all sectors of the economy, including construction, if they have enough information to launch an investigation.

And one law firm believes construction companies should expect the taxman to turn the spotlight on them.

Andrew Granger, a partner in the employment law team at Collyer Bristow, said: "HMRC has a duty to investigate where it believes fraudulent activity is happening, so it is not surprising that investigations are already underway.

"With an estimated 171,400 employers in the construction industry making use of the scheme, there is no doubt that property and construction businesses will be among those investigated.

"The Coronavirus Job Retention Scheme has been a lifeline for many property and construction businesses, yet there are reports that it is being abused, for example, by employers asking staff to work while on furlough."

HMRC has now launched an online portal to enable employees or members of the public to report suspected fraud under the scheme and last month HMRC confirmed they had made their first arrests for furlough abuse.

The government recently introduced a 90-day amnesty on furlough abuse, confirmed in the Finance Act 2020, which received Royal Assent on 31 July. The amnesty allows businesses to repay furlough money claimed in error without the threat of sanction or penalty.

Granger said the move "sent a clear message" to businesses that they should take advantage of the amnesty or face investigation.

"Businesses that do not take advantage of such an amnesty and are later found to have stretched the rules may find themselves under serious investigation and facing fines," Granger said.

He added: "It is vitally important that employers keep good and clear records of staff on furlough, particularly as it is now possible to allow staff to return part-time. In addition, employers are required to have sent written confirmation to employees confirming that they have been furloughed. These written agreements must be retained for 5 years."

The comments came after a West Midlands man was arrested after an HMRC probe into a suspected £495,000 Coronavirus Job Retention Scheme (CJRS) fraud.

HMRC officers executed a search warrant last month in the Solihull area and arrested the 57-year-old, seizing computers and other digital devices. Funds held in a bank account relating to his business have also been frozen.

Richard Las, acting director, Fraud Investigation Service, HMRC, said: "The CJRS is part of the collective national effort to protect jobs. The vast majority of employers will have used the CJRS responsibly, but we will not hesitate to act on reports of abuse of the scheme.

"This is taxpayer's money and any claim that proves to be fraudulent limits our ability to support people and deprives public services of essential funding. 

"As usual, we have built steps in to prevent mistakes and fraud happening in the first place, but anyone who is concerned that their employer might be abusing the scheme should report it to HMRC online."

More than £27.4bn has been claimed through the Coronavirus Job Retention Scheme supporting 1.1m employers and 9.4m furloughed jobs.

Article source: Construction Manager