The Furlough scheme may have been introduced quickly and caused errors, but this was not the main reason for fraud, say tax and advisory firm Blick Rothenberg. Fiona Fernie, a tax dispute resolution partner at the firm shares her thoughts.
Reports from the National Audit Office that because the Furlough scheme was brought in rapidly considerable levels of fraud and error were inevitable, just don’t stack up.
The loss of more than £3bn cannot just be put down to how quickly the scheme was brought in; the Government were under pressure to do just that.
Whilst the rapidity with which the scheme was introduced may have caused errors, it didn’t necessarily cause more fraud.
It was obvious from the outset that workers put on furlough should not be allowed to work, and it is not clear how taking longer to introduce the scheme would have made any difference. In fact, the longer people have to find out the mechanics of a scheme like this, the longer they have to work out ways of deliberately circumventing the rules. That is exactly what criminals and some greedy employers appear to have done.
The Government were never going to be able to either check the email systems of everyone who claimed the grant to make sure that workers on furlough were not sending emails, or visit sites to make sure workers on furlough were not present at the time the grant applications were being processed.
Those kinds of checks can only be done after the event as part of an enquiry, and will be dependent to some extent on tip offs or analysis of the data submitted using HMRC’s ‘Connect’ system to identify anomalies and risks.
There could be large amounts of money that firms have claimed in error and I urge businesses who are in any doubt to contact HMRC immediately and raise the issue. If they don’t then what could have been a simple mistake will be looked at as fraud and businesses will be investigated.
As it was many employers complained about how long it was before they were able to claim and the impact on their businesses; there would have been even more people losing their jobs completely had the scheme been introduced more slowly.