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Furlough fraud cost HMRC £100 million

HMRC estimates organised crime gangs used the furlough support scheme to defraud £104 million since 2020.

First launched in March 2020, furlough was designed to help businesses retain and continue to pay staff while they were closed or had operating difficulties. 

HMRC paid up to 80% of employees' wages during this time and the scheme officially ended on 30 September 2021 after multiple extensions.

More on the furlough scheme:

How can HR reintegrate staff post-furlough?

Furloughed workers not seeking new roles

Danger: furlough fraud

According to law firm Pinsent Masons, gangs stole a total of £367 million from Covid support schemes overall; a further £258 million was taken fraudulently from the Self-Employed Income Support Scheme (SEISS) and £5 million through Eat Out to Help Out.

Pinsent Masons partner Andrew Sackey, said that HMRC is closing in quickly on those who took advantage of support schemes.

He said: "The Covid-19 support schemes were an enormously-important undertaking that saved innumerable jobs and businesses. Unfortunately, they were also a bonanza for organised crime gangs. HMRC is now hot on the trail of those who defrauded the Treasury."

SEISS was targeted more as fraudulent claims only required someone to file a self-assessment income tax return. Furlough fraud was more complicated as a person had to create a business and register it for PAYE income tax before making a claim.

Eat Out To Help Out fraud required the business in question to be registered as a food seller with a local authority before it could qualify for the scheme.

Sackey added: "HMRC is deploying very substantial resources to investigate and prosecute those fraudsters. Many thousands of investigations into suspected fraudulent SEISS claims have already been opened.”

"There will be major fines and prison sentences handed down once those investigations are complete."