The government’s furlough scheme is one of the most significant financial support packages in UK history, and achieved widespread praise from employers and employees alike when it was introduced by Chancellor Rishi Sunak in late February 2020.
However, there have been reports of companies committing so-called “furlough fraud”. It is said that there have been in excess of 3,000 reports of furlough fraud to HMRC since April 2020.
What is furlough fraud and how is it committed?
Furlough fraud is generally understood to mean claiming support from the furlough scheme whilst still asking furloughed employees to work.
To claim support from the scheme legally, employers are required to lay off employees temporarily and these employees are unable to work during their period of being furloughed. However, one survey found that one third of furloughed employees have been told to continue doing their normal work, while 29% were asked to complete admin tasks. Around 1 in 5 furloughed employees have been asked to do someone else’s job or to work for a different company connected to their employer.
It is these clear breaches of the rules that the government is taking steps to crack down on. As reports of furlough fraud continue to rise, the government is introducing new legislation in the form of the Finance Bill 2020. This is to ensure that it has the ability to tackle furlough fraud, whether committed intentionally or otherwise.
What is the Finance Bill 2020?
The Finance Bill 2020 is a bill that, amongst other things, aims to give HMRC powers to investigate claims made through the Coronavirus Job Retention Scheme (CJRS) for five years. These powers would be the equivalent as afforded to investigate self-employed workers that have made claims through the Self-Employment Income Support Scheme (SEISS).
There is a 30-day amnesty period in place during which time employers can notify HMRC of any instances in which they have either accidentally or intentionally misused the furlough scheme, without fear of repercussion.
However, employers that are found to have committed furlough fraud and not to have admitted it during this 30-day period will be subject to serious investigations. Significantly, the draft legislation proposes to allow HMRC to pursue company office holders in cases where businesses become insolvent. If HMRC can prove that an employer broke the rules of the furlough scheme intentionally, the employer could face a prison sentence of up to 10 years.
It is expected that the bill will allow the government to investigate these claims for five years after the furlough scheme was introduced. The legislation is being rushed through parliament as a priority, and is expected to become law by early July 2020.
The introduction of this bill means that businesses need to have a robust reporting and time tracking systems in place now to ensure compliance, eligibility and protect themselves against the serious financial and legal consequences of abusing the furlough system.
What this means for businesses
This latest legislation makes it clear that the government is leaving no room for error or misuse with regard to furlough claims. Any company found to have breached the terms of the furlough scheme will be required to pay back all furlough claims made in full, and HMRC is clearly stating that they will have no hesitation in pursuing serious legal action against company directors.
In order for businesses to be confident that their use of the furlough scheme is justified and meets the government requirements, employers must formally track and report accurate employee working hours. Without this, you will not be able to recover and claim your employees wages through the CJRS. This kind of formal reporting is also necessary to ensure you have all the evidence to show that your use of the furlough scheme has been legal and above board.
To ensure your business is compliant and to maximise the financial support that your business is eligible to receive from July 1st, businesses need to ensure that they have the right technology in place to facilitate this new way of working without fear of repercussion further down the line.
Protect your business with tried-and-tested time and attendance software
With many employers currently managing a remote, flexible, workforce, time and attendance software will play a crucial role in the accuracy of your workforce records, and is extremely important to demonstrate compliance with HMRC’s requirements. This software allows you to capture, record, and report on your workforces’ hours accurately; enabling you to make successful claims under the new, flexible, furlough scheme.
Not only this, but over the span of forty years, we have worked incredibly hard to refine, optimise and streamline our software to reduce the burden of remote workforce management administration and minimise the risk of errors which, especially now, could be incredibly costly to businesses of all sizes.
You can track time worked, shift patterns, absences, holidays, sick leave and more all from within one piece of software. It’s an incredibly powerful tool which will help you ensure that you are not risking your eligibility for financial support due to inaccurate, or poorly maintained, employee attendance records.
The software is intuitively designed to help you manage attendance, absence, shifts and flexible hours through reports and payments both on a person-by-person basis and delivering an overview of your entire workforce at a glance. Whether you have a workforce of 50, or 500, the clever automation features and self-serving interface is designed with your business needs in mind.
If you are concerned about managing your workforce during this time, we can help assess your current workforce management solutions and can even get time and attendance systems up and running in under two weeks. Talk to a member of our team about your unique challenges today.