Whilst most employers have adhered to the job retention scheme rules, there have been reports through disclosures from whistleblowers of widespread furlough fraud.
Furlough Fraud
HMRC have reported that they had received 795 reports of furlough fraud up to the 14th May 2020, whilst the whistleblowing charity, Protect, revealed that 36% of all coronavirus related calls pertained to furlough fraud. Another whistleblowing charity, WhistleblowersUK, also disclosed that it had also received a large number of calls on the issue, describing the problem as "rife".
A considerable number of the furlough fraud complaints received so far relate to employers furloughing their staff, but then asking employees to carry on working. Other types of fraud identified include furloughing staff without telling them, and claiming for staff who have already been dismissed.
Twenty eight percent of the calls of furlough fraud received by Protect, were from those working in the hospitality sector, whilst 18% were from those who work in retail. WhistleblowersUK reported that a fifth of the calls that it had received had come from workers in social care.
Reaction
A HMRC representative said in relation to the furlough fraud that they are "committed to ensuring the tax systems we operate are used fairly and efficiently, and where necessary will take action to ensure compliance with the relevant rules, regulations and legislation that govern the UK taxation systems. We value all the information provided to us by members of the public aimed at helping us achieve that goal. We’d ask anyone concerned that their employer might be abusing the scheme to please contact us. It could be that you’re not being paid what you’re entitled to, they might be asking you to work while you’re on furlough, or they may have claimed for times when you were working." Currently, the HMRC reporting hotline is down, but the public can report matters online.
The chief executive of Protect, Liz Gardiner, stated: "People have simply been told to work despite being furloughed and they obviously feel uncomfortable about this as it’s wrong – it is deceiving taxpayers out of money. We've also heard from people who didn't know they'd been furloughed until they got 80 per cent of pay for doing their usual work." She also told Sky News that: “We expect this is just the tip of the iceberg. In this time of unprecedented change, when people are really worried about their jobs. It’s a really difficult thing to stand up and say ‘I think you’re committing fraud and I’m going to report you.” Meanwhile, the chief executive of WhistleblowersUK, Georgina Halford-Hall, said that workers had often been placed in the invidious position of having to choose between breaking the law or being dismissed. She stated "You can see the absolute terror that good people are experiencing." She added in an interview with Sky News that: "I’m sure employers are in a very difficult situation not knowing when an invoice might be paid. But to put their employees, who are really dedicated to those people they have got to know in the community, in a position where they’re having to choose between committing a criminal act, or not having a job, or not look after the old people they’re caring for, it really is a disgrace, a national disgrace.”
Baroness Kramer, co-chair of the all-party parliamentary group for whistleblowing, responded to the reports of furlough fraud by stating: "At a time like this when we as taxpayers are stepping forward to give people a lifeline, this abuse seems even more outrageous than it might under normal circumstances. Taxpayers are feeling the pain."
