Furlough fraud 1st case
Discussion
HMRC said:
Furloughed workers can:
Take part in volunteer work.
Undertake training and should be encouraged to do so.
Continue working in a second job they already have.
Take part in disciplinary or grievance proceedings although advice should be sought on the particular role undertaken to ensure this could not be construed as providing a service to the employer.
If their employment contract permits, take on a new job, provided they are able to return to the employer as soon as furlough ends and also to participate in any training needs of the original employer.
If they are union or non-union representatives they may undertake duties and activities for the purpose of individual or collective representation of employees or other workers provided that while doing this they do not provide services to, or generate revenue for, the employer or any linked organisation.
What one can’t do is get a second job that breaks the employment contract with the first. Take part in volunteer work.
Undertake training and should be encouraged to do so.
Continue working in a second job they already have.
Take part in disciplinary or grievance proceedings although advice should be sought on the particular role undertaken to ensure this could not be construed as providing a service to the employer.
If their employment contract permits, take on a new job, provided they are able to return to the employer as soon as furlough ends and also to participate in any training needs of the original employer.
If they are union or non-union representatives they may undertake duties and activities for the purpose of individual or collective representation of employees or other workers provided that while doing this they do not provide services to, or generate revenue for, the employer or any linked organisation.
Edited by V8LM on Sunday 12th July 09:29
The article says this was part of a separate investigation into fraudulent activity. When the scheme was opened up I did think there will be a lot of new employees( family members and distant relatives ) on a lot of companies books.
I hope they get the convictions and are able to identify assets but unfortunately there are a lot of criminals that masquerade as legitimate business owners in “the community” whenever pay their business rates or taxes and just operate shell or phoenix companies. Often they are just fronts for drugs or other criminality.
Even on here there was clearly evidence of franchised dealerships claiming furlough whilst their staff continued to sell and work. It has been a tricky time for all so no surprise the criminals came out the woodwork.
I hope they get the convictions and are able to identify assets but unfortunately there are a lot of criminals that masquerade as legitimate business owners in “the community” whenever pay their business rates or taxes and just operate shell or phoenix companies. Often they are just fronts for drugs or other criminality.
Even on here there was clearly evidence of franchised dealerships claiming furlough whilst their staff continued to sell and work. It has been a tricky time for all so no surprise the criminals came out the woodwork.
Eric Mc said:
XCP said:
I know someone who has been furloughed and then started working in another industry completely full time. No doubt HMRC will catch up with him!
Why?On the face of it, they haven't broken any furlough rules.
Although if we had anything like traditional fiscal conservatism they shouldn't be allowed to do so.
Many low paid workers hold down more than one employment at a time. If they are furloughed but not the other, the government felt, correctly, that they should not suffer a loss of income if one employer had no work for them and therefore couldn't pay them.
The furlough scheme is on an employment by employment basis, not an employee basis.
The whole point of the scheme was to prevent mass redundancies. Whether all it has done is just defer that outcome we shall see,
The furlough scheme is on an employment by employment basis, not an employee basis.
The whole point of the scheme was to prevent mass redundancies. Whether all it has done is just defer that outcome we shall see,
Eric Mc said:
Many low paid workers hold down more than one employment at a time. If they are furloughed but not the other, the government felt, correctly, that they should not suffer a loss of income if one employer had no work for them and therefore couldn't pay them.
The furlough scheme is on an employment by employment basis, not an employee basis.
The whole point of the scheme was to prevent mass redundancies. Whether all it has done is just defer that outcome we shall see,
Out of interest, would there be anything to prevent an employee of company A being furloughed but then working for company B which is owned by the same holding company, with company B charging company A for the services?The furlough scheme is on an employment by employment basis, not an employee basis.
The whole point of the scheme was to prevent mass redundancies. Whether all it has done is just defer that outcome we shall see,
Eric Mc said:
WestyCarl said:
We suspect the end of yr financial audits will check for this as well, it would be a trivial for them.
They don't carry out such "audits" unless they open up a full blown "tax enquiry" - which is only in a very small percentage of cases.Annual accounts figures do not reveal enough detail to give HMRC the ammunition they would need to spot fraud - unless the fraud was truly massive.
Over the past 20 years of submitting hundreds of company, sole trader and partnership accounts to HMRC, not one has been "audited" or investigated because of perceived anomalies in the accounts. HMRC does not review accounts in detail the way they used to prior to 1995.
mr_spock said:
Out of interest, would there be anything to prevent an employee of company A being furloughed but then working for company B which is owned by the same holding company, with company B charging company A for the services?
If it walks like a duck and quacks like a duck, it’s probably a duck.Apply the same rules to fraud.
WestyCarl said:
I meant the standard financial audits by PWC, etc. More and more they are now checking for fraud, especially regarding company income + renumeration.
undergo Only a tiny number of businesses out of the total number of businesses in the UK require statutory audits. The furlough period is quite recent and the statutory audits for many businesses covering that period will not have been undertaken yet - so in most cases reliance on statutory audits by external auditors will not reveal any errors or frauds in respect of furlough errors or fraud - not for quite a few months yet.
gottans said:
I wonder what the punishment will be, slap on wrist or something really painful. Personally I think the latter as the scheme was put in place to help in a desperate situation and we should all be angry at people abusing it.
It's going to be interesting, I think if someone gets found really taking the piss let's say not telling staff they are on it but having them work as normal. Then yes I think they should be punished severely. But if perhaps they bent the rules, kept up with a few emails, did a few quotes when at home. Then if that means their job and companies gets through this then perhaps a more pragmatic approach is needed.
The entire point of the system was to keep people in jobs if they go after companies that bent the rules to survive which I suspect lots have done, it completely defeats the point of the system.
I think companies that put people and still have people on furlough but with no intention of bringing them back are just as much in the wrong as anyone else.
WestyCarl said:
I meant the standard financial audits by PWC, etc. More and more they are now checking for fraud, especially regarding company income + renumeration.
There is no such thing as "standard financial audits". Company's undergo audits because Company Law says they have to. That's why they are referred to as "statutory audits". However, MOST UK limited companies qualify as "small" companies and therefore are exempt from this statutory requirement. Even if a small company has PWC or E&Y or some other large firm as their accountants, in most cases they will not ask them to carry out an audit of the records, unless they have specific reasons to do so.
A "small" company can still undergo an audit if the shareholders insist on it but since most small companies are owned and managed by the same people, they do not ask for any official audit to be done - as it saves a lot in accountancy fees.
This loosening of company audit rules dates all the way back to 1990 although the definition as to what constitutes a "small" company for audit exemption purposes has changed over the 30 years since audit exemption came in.
Non limited company businesses i.e. sole traders and partnerships have no legal requirement for their annual accounts to be audited - unless they are governed by special regulations, such as the Friendly Society Rules or The Charity Commissioners.
Eric Mc said:
XCP said:
I know someone who has been furloughed and then started working in another industry completely full time. No doubt HMRC will catch up with him!
Why?On the face of it, they haven't broken any furlough rules.
mr_spock said:
Eric Mc said:
Many low paid workers hold down more than one employment at a time. If they are furloughed but not the other, the government felt, correctly, that they should not suffer a loss of income if one employer had no work for them and therefore couldn't pay them.
The furlough scheme is on an employment by employment basis, not an employee basis.
The whole point of the scheme was to prevent mass redundancies. Whether all it has done is just defer that outcome we shall see,
Out of interest, would there be anything to prevent an employee of company A being furloughed but then working for company B which is owned by the same holding company, with company B charging company A for the services?The furlough scheme is on an employment by employment basis, not an employee basis.
The whole point of the scheme was to prevent mass redundancies. Whether all it has done is just defer that outcome we shall see,
XCP said:
I am amazed that it is allowed. Someone who is furloughed comes into another industry and takes money out of the pockets of longstanding employees in that industry whilst receiving money from the government to do so. It is causing great resentment where I work.
The rules were put together very quickly and are not permanent. They were introduced to fix a very specific short term problem i.e. preventing mass redundancies because of Covid 19. There are lots of anomalies and inconsistencies in the rules.Not stopping an employee from having another job or self employment whilst furloughed from another job was deemed acceptable in the circumstances.
XCP said:
I am amazed that it is allowed. Someone who is furloughed comes into another industry and takes money out of the pockets of longstanding employees in that industry whilst receiving money from the government to do so. It is causing great resentment where I work.
What if said person is building up experience and contacts as they expect they will never return from furlough, and waiting for the redundancy before looking for alternatives would be pretty negligent for themselves and their own financial situation?To be pedantic, employees on furlough are not receiving anything from the government, they are being paid 80-100% of their salary from the employer. The employer claims this back from the government. Furlough money administratively is nothing to do with the employee. The government are paying companies as an incentive to reduce redundancies until demand picks up.
I'm amazed it's allowed, but it was put together so quickly that the details couldn't be done in time, so banning any other work would have hit people that *need* the second income much harder than those that are milking the bonus money.
XCP said:
I am amazed that it is allowed. Someone who is furloughed comes into another industry and takes money out of the pockets of longstanding employees in that industry whilst receiving money from the government to do so. It is causing great resentment where I work.
There was an article back at the start of lockdown featuring an airline pilot on furlough who had gone working as a supermarket home delivery driver, the article was praiseworthy of his ''can do'' attitude and he was even quoted as saying he was doing it just to keep himself busy as much as anything.So not only are taxpayers paying 80% of his existing very high salary he's also earning more money elsewhere and depriving someone with possibly no income at all of the opportunity of much needed work.
Edited by mike74 on Sunday 12th July 15:06
mike74 said:
XCP said:
I am amazed that it is allowed. Someone who is furloughed comes into another industry and takes money out of the pockets of longstanding employees in that industry whilst receiving money from the government to do so. It is causing great resentment where I work.
There was an article back at the start of lockdown featuring an airline pilot on furlough who had gone working as a supermarket home delivery driver, the article was praiseworthy of his ''can do'' attitude and he was even quoted as saying he was doing it just to keep himself busy as much as anything.So not only are taxpayers paying 80% of his existing very high salary he's also earning more money elsewhere and depriving someone with possibly no income at all of the opportunity of much needed work.
Edited by mike74 on Sunday 12th July 15:06
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