Thursday 9 July 2020 3:54 pm

Man arrested over £495,000 'furlough fraud'

A man has been arrested on suspicion of defrauding the government’s job retention scheme out of £495,000.

The arrest, which is thought to be the first relating to the government’s furlough scheme, happened in Solihull in the West Midlands.

Read more: Think tank: Furlough bonus scheme a £9bn ‘deadweight loss’

Computers were seized and funds were frozen in the man’s business bank account, according to HMRC. He was also arrested, along with another eight men across the West Midlands, in relation to a separate suspected multimillion-pound tax fraud and alleged money laundering offences.

Jessica Parker, partner at law firm Corker Binning said: “This highly publicised arrest was decisive and strategic. Through this action HMRC are sending a clear message to those who are tempted to take advantage of the Chancellor’s furlough package.”

“It is likely that this action will be followed by a publicised amnesty for those who may have claimed furlough payments fraudulently and HMRC will expect that today’s arrest will encourage those who otherwise may have ‘waited it out’ to come forwards.”

“Furlough fraud is rumoured to  have been conducted on a large scale and HMRC’s enforcement division will be planning a significant programme to counter it.”

The furlough scheme was introduced by the government at the start of lockdown to help mitigate the effect of coronavirus on businesses.

Read more: Pace of furloughing slows as cost of job support measures tops £33bn

The scheme pays 80 per cent of salary costs for furloughed staff but this will fall to 70 per cent in September before the government winds down the scheme the following month.

Yesterday, Chancellor Rishi Sunak announced a job retention bonus scheme which will see the government pay businesses £1,000 for every furloughed employee they bring back to work and keep employed until the end of January.

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