Olliers is a market leader in defending investigations and prosecutions relating to financial crime, business crime, regulatory breaches, and asset recovery. We have an outstanding reputation for our proactive approach to dealing with the investigative stages of a process and crisis management. We always look to avoid a prosecution and achieve an early conclusion with the minimum publicity for our clients.
We will always look to nip an investigation in the bud without a prosecution commencing. We are acutely aware of the importance of reputation management. We always liaise with investigating authorities from the outset. We consider early involvement of counsel and frequently look to make representations against charge without losing sight of the primary objective, which is preserving our client’s position in the event of a trial.
It is clear that as society returns to normal and the government starts to try and balance the books, there will be substantial political pressure to investigate those who have allegedly profited from assistance given by the government, the most high profile of which is the job retention scheme.
Coronavirus Job Retention Scheme
As at April 2021 some 6000 employers were under investigation of some form by HMRC in connection with false claims under the Coronavirus Job Retention Scheme. Serious matters could lead to arrests in relation to offences such as cheating the public revenue, VAT evasion and money laundering. In cases where significant sums are involved, HMRC may commence the investigation with what is known as a dawn raid. Anyone subject to a dawn raid should seek immediate advice.
In serious cases, assets may be restrained and accounts frozen, which can have a paralysing effects on a business.
Olliers’ pro-active approach
What sets Olliers apart from other law firms is the pro-active approach that we take during a criminal investigation . Our specialists appreciate the stress and anxiety any criminal investigation can cause. In all investigations, it is crucial that early advice is sought, liaison takes place with investigators and there is an early assessment of the level of seriousness. With this approach it is possible to minimise the stress, anxiety and disruption an investigation can cause.
Since the start of the Job Retention scheme, a cumulative total of 11.5 million jobs have been supported by the CJRS at various times. This is across all claims submitted to HMRC by 14 April 2021.
Opposition parties have been placing the Government under pressure in respect of its handling of the pandemic there has been significant pressure to investigate furlough fraud. In early December 2020 Owen Thompson of the SNP asked the Chancellor of the Exchequer, whether he would investigation the estimated £3.5 billion fraudulent claims to the Coronavirus Job Retention Scheme.
In reply, Jesse Norman Financial Secretary to Treasury stated, on 4th December 2020 ‘The Coronavirus Job Retention Scheme forms part of a collective national effort to protect people’s jobs. Fraudulent claims put at risk the provision of public services and the protection of livelihoods.’
In March 2021, the government announced the creation of the Taxpayer Protection Taskforce with funding of £100m to combat fraud linked to Covid-19 support.
Whistle blower provisions are in place. Janet Alexander, director of the Taxpayer Protection Taskforce, has stated,
“We will not hesitate to act on reports of abuse of the scheme or any HMRC-administered Covid-19 support packages.”
Employers currently under investigation
On 27th April in a written reply to a question from Opposition Whip, Bambos Charolambos, Jesse Norman confirmed that some 6000 employers were under investigation, “for a range of reasons, including not paying employees, making inflated claims, or making claims even though employees are still working. Within a single case there is often a number of reasons why HMRC are taking action”
He confirmed that ‘Compliance investigations’ had started and that HMRC estimated that CJRS error and fraud could be between 5-10%.
Norman also stated ‘The Coronavirus Job Retention Scheme forms part of a collective national effort to protect people’s jobs. Fraudulent claims put at risk the provision of public services and the protection of livelihoods’.
What are examples of furlough fraud?
Examples of deliberate abuse of the system might include:
- Requesting furloughed staff to continue to work from home
- Furloughing staff without their knowledge as they continue to work
- Claims in respect of ‘ghost’ employees.
- Backdating of claims to cover a time when an employee was actually working.
HMRC has a dedicated page to allow for reporting of fraud in relation to the coronavirus relief schemes:
- Job Retention (Furlough) Scheme
- Self-Employment Income Support Scheme
- Statutory Sick Pay support for employers
- Eat Out To Help Out
Government guidance on furlough
Government Guidance published in on the Job Retention states that,
‘During hours which you record your employee as being on furlough, you cannot ask them to do any work for you that:
- makes money for your organisation or any organisation linked or associated with your organisation
- provides services for your organisation or any organisation linked or associated with your organisation
Your employee can:
- take part in training
- volunteer for another employer or organisation
- work for another employer (if contractually allowed)’
There is no doubt that many innocent mistakes have been made. It is also likely that in minor cases, penalties will be preferred to prosecutions.
However, in serious and blatant cases, criminal investigations will commence and prosecutions will follow. The key feature is seeking timely legal advice from specialists who are willing to adopt a front footed but sensitive approach to the investigation stage of a case.
Some frequently asked questions
No, a key element of a fraud is ‘dishonesty’.
Deliberate abuse of the system might include; Requesting that furloughed continue to work from home, furloughing staff without their knowledge as remain in work, claims in respect of non- existent, ‘ghost’ employees, backdating claims to cover a period when an employee was in fact working.