The Government’s crackdown on furlough fraud

When schools were forced to close in March, due to the Covid-19 pandemic, many schools chose to make use of the Government’s Job Retention Scheme and furloughed some of their staff.

Whilst most employers acted honestly and were grateful for the lifeline offered by the scheme, the Government revealed last month that an estimated £3.5 billion of furlough payments were claimed either fraudulently or in error.  It is thought that these fraudulent or mistaken payments constituted between 5 and 10% of the overall amount claimed.

HMRC has said that it will be tackling abuse and fraud of the scheme, and it has a list of 27,000 high-risk cases which have been reported to it though its fraud telephone hotline. Whilst HMRC has indicated that it does not plan to track down employers who have made legitimate mistakes in submitting their claims, it does expect employers to check their claims and repay any sums erroneously claimed. It would therefore be prudent for schools to look back over their furlough claims and satisfy themselves that all claims were correctly submitted. In the event that any errors are discovered in this self-audit, then HMRC should be notified of the error by 20 October 2020.

If your school is a charity then, prior to making any repayments to HMRC, school governors will need to be clear that the repayment is indeed required, and we would recommend that they seek our advice before making any repayment. We are available to discuss the factors they need to consider if they are concerned about their use of the scheme and whether there is any need for them to notify the Charity Commission.