Furlough Fraud: Could You Be Arrested Under The Fraud Act 2006?

Those who claimed furlough payments, despite knowing that they weren’t eligible to receive the money, could be charged under the Fraud Act 2006. 

Furlough fraud

During the pandemic, the government created a furlough scheme to allow employers to continue to pay their employees whilst the pandemic restrictions were in place, curtailing the movement of people.

The majority of claims lodged with the HMRC were genuine. However, some people took advantage of the rules and lodged a claim for support, despite knowing they didn’t meet the criteria. HMRC now suspects that billions of pounds have been lost to Covid-19 fraudsters.

Deliberate dishonesty

The government is keen to recover any money that has been wrongly paid out. The HMRC accepts that some overpayments may have occurred by accident. In a statement, it encouraged “businesses and individuals to come forward and self-correct if they have made a mistake in their claim.”

However, the repercussions could be more serious for those who intentionally abused the system. This is because it could amount to fraud. Fraud can take many forms, but at its core is a question of honesty. If an attempt is made to gain or cause loss and is dishonest by applying ordinary standards of honesty, then fraud is committed under the 2006 Fraud Act. There are three main provisions:

• Fraud by false representation – Section 2 Fraud Act 2006.
• Fraud by failing to disclose information – Section 3 Fraud Act 2006.
• Fraud by abuse of position – Section 4 Fraud Act 2006.

Examples of furlough fraud might include:

• Claiming furlough for employees who don’t exist or who have already been let go
• Claiming furlough for employees who are still working full-time
• Claiming furlough for employees but asking them to work on a volunteer basis
• Recruiting employees just so the company can claim furlough

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Could you be investigated?

Company officers who lodged fraudulent furlough claims could be investigated personally for criminal offences. They may be charged with fraud by false representation, or failing to disclose information, if employees have returned to work and the HMRC is not updated. If senior management, including directors, were also aware of this practice, they would also be personally liable to immediate arrest, investigation and charges under the Fraud Act.

Clearly, fraud is a serious allegation with serious consequences, if convicted. If you are concerned about your position and require further information, please contact Isaac Mirza at Aticus Law. We represent those who have been accused of business crime and can advise you further - speak to our company law solicitors.