Furlough warning: Fraud and scams ‘are sure to continue’ as new HMRC data comes to light


Furlough payments, while vital, have not been issued without controversy. The expensive scheme has been difficult to manage and recently released information shared a light on just how prevalent financial problems have become.

On October 23, the NAO reported that the government’s quickly developed schemes to protect jobs and support businesses financially during the pandemic, which includes both the furlough scheme and SEISS, were rife for considerable levels of fraud and error.

Their analysis found while the schemes have been largely successfully, as many as 2.9 million people found themselves not being eligible for them, due to either ministerial decisions or a lack of guarding from fraudulent activity.

Additionally, evidence emerged of some employers keeping staff working while claiming furlough payments and in some cases, employees never received the payments at all.

On just how much this may all end up costing the UK, the report laid out the following: “The scale of total fraud and error is likely to be considerable, particularly for CJRS, but HMRC will not know the actual levels until the end of 2021 at the earliest.

READ MORE: Martin Lewis lashes out at Rishi Sunak using HMRCs own data

While a lack of available data was noted, insight from Saffery Champness, the chartered accountants, may shed light on what we could see in the months ahead.

The company obtained data from HMRC through a freedom of information request which sheds light on how UK taxpayers have been troubled by coronavirus themed financial issues.

According to said data, taxpayers reported 9,948 coronavirus related scams to HMRC in the first half of 2020.

The number of scams reported to HMRC which explicitly mentioned COVID-19 peaked in May with 5,048 incidents, after which the figure fell by more than 50 percent to 2,495 in June.

Mike Hodges, the Head of Private Wealth at Saffery Champness, commented on the troubling findings while noting what consumers can do to avoid these kinds of problems: “In the first six months of 2020, the Coronavirus brought unprecedented challenges to public health, to the healthcare system and to the state of the economy, yet what this data shows is that in the midst of these crises people face a further man-made threat in the form of unscrupulous individuals.

“The surge in the number of scams received by taxpayers since the onset of the crisis continues to threaten the security of peoples’ personal data and their financial wellbeing, at a time when households are already facing enormous strains on their finances.

“In the minds of those who perpetrate such scams, no issue or crisis is too grave that it does not present fertile ground for exploitation and profiteering, and Coronavirus has been no exception.

“The scams themselves take all forms to take advantage of the current pandemic. Some offer the recipient a tax refund to help manage the financial pressures of the Coronavirus, while others take the form of a bogus fine levied on the recipient for repeatedly leaving the house during the lockdown.

“The common denominator is that they all seek to exploit peoples’ legitimate concerns and fears about the pandemic, as well as their desire to do their part in fighting the crisis by getting their taxes right.

“The marked decline in the number of Coronavirus scams in June may reflect the efforts of HMRC and other Government bodies to combat fraudulent activity, and should certainly not be interpreted as a deliberate ceasefire on the part of the scammers in their campaign to exploit the pandemic for financial gain.

Mike went on to address the srop in figures seen in the summer months  “While the number of reported scams which specifically referenced the Coronavirus halved in June, the number of overall scams reported that month increased by more than a third, so the threat is far from over.

“The range of Government relief programmes, such as the Self-Employed Income Support Scheme, which were in full swing by the start of June, provided ample opportunity for scammers to camouflage bogus communications amongst genuine correspondence from HMRC. For as long as these relief programmes continue and taxpayers are required to liaise directly and regularly with HMRC, scams are sure to continue in one form or another.

As he concluded: “Always treat with extreme caution any unexpected text, email, or automated phone message claiming to be from HMRC, particularly those which offer a tax rebate or those which claim you have a fine to pay. Do not follow any links in messages and do not provide any personal information or login details until you are certain the communication is genuine. The Government website has guidance on how to identify genuine HMRC contact.”



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