Coronavirus Crime - Arrests over £3.4million furlough fraud.

News of arrests on Friday for an alleged multi-million pound furlough fraud should not be unduly surprising as the scope for abusing the Coronavirus Job Retention Scheme was great. The CJRS has cost the public purse in excess of £61 Billion thus far, so even a small percentage lost to fraud is a significant sum. Investigations are being undertaken by HMRC’s Taxpayer Protection Taskforce.

The CJRS scheme allowed employers to retain staff, at the height of the pandemic, by ‘furloughing’ their employees, and claiming up to 80% of the employee’s salary (up to £2,500 monthly per employee).

Whilst the majority of employers used the scheme strictly to the letter, some may have been tempted to apply for rebates in excess of actual salary costs. Others, flagrantly in breach of the rules of the scheme, may have claimed for staff they kept working full time throughout. These are not victimless crimes as any monies misappropriated from the public purse mean either a cut in funding elsewhere, or a hike in taxes.

Further opportunities for fraud exist within the Government backed “Bounce Back Loan” where, through sheer necessity, the applications were simple, online, and self-certifying. Already stories are coming through of fraudulent applications being successful and loan monies being paid into newly opened Business accounts, being transferred into other accounts, and dissipated with no intention of repayment.

Like the impact of Coronavirus on individual’s health, the impact of financial fraud on the Government back financial support packages will take many years to assess fully.

At any time of rapid legal or regulatory change, especially in response to emergency situations, fraudsters will try to find ways to dishonestly siphon as much public money as possible. For instance, twenty years later the United States is only just starting to understand the extent of the frauds, some estimates say hundreds of millions of dollars, perpetrated following the September 11th terrorist attacks.

However, legitimate employers and businesses may also be caught up in the confusion. Analysis shows that the Coronavirus Regulations, guidance, and rules about financial support have changed over 60 times since March last year. It is almost certain that, in the constantly changing landscape, firms will have made entirely honest mistakes. At Crucible, we recognise that for those falsely accused of perpetrating frauds, it will be a very worrying time. Our expert serious crime and financial crime barristers will be able to assist and guide you from the earliest stages of any investigation. Please do contact us if you need help.