Possible Furlough Fraud

[Watermelons29]

My friend's employer is paying her less due to reduced hours but they are on the Government furlough list. I obviously have too much free time in lockdown!

If you suspected someone else's employer was claiming flexible / part furlough for them, but not paying them, would you say anything or should I mind my own business?

Report it. Furlough fraud is despicable. It's been too easy for unsrcupulous employers to exploit. We will all be paying for this for years.

That does not quite make sense ?with flexible furlough you can claim flexible hours ? So they might not be claiming full hours ?I am not sure quite what you are saying

Flexible furlough and sometime without a full-time time contract may each lead to this, so it isn't necessarily fraud. Equally they may claim furlough for some staff and nor others. If she believes it isn't correct then she can submit a report to HMRC with all the details and they'll check from there.

What is the government furlough list?

The list of employers claiming furlough can be found here www.gov.uk/government/publications/employers-who-have-claimed-through-the-coronavirus-job-retention-scheme

They reduced her hours but employers can claim for hours not now worked because of C19.

I’m confused. How do you know they are committing fraud just because they are on this list?

I'm confused too. They are on the list? So? This is a huge jump, predicting.

If you think someone is breaking the law report them.

However employers can reduce hours and claim flexible hours on the furlough scheme. You haven't given us enough information to know whether there is fraud going on or whether you don't understand how the scheme works.

Your posts are very unclear, can you explain a bit more.

Being on the list doesn't mean that they are claiming furlough for every single employee, just that they are claiming for at least 1

Actually, assuming that OP understands what flexi-furlough is, which may well not be the case, then if they have reduced her hours and reduced her wages as well, then they are almost certainly not guilty of fraud. They will have behaved in a completely correct and also morally correct way by not claiming for hours that would not be worked anyway.

It is much more likely that OP doesn't understand though...

Before she was working five days a week, until lockdown 1, when her hours reduced but I don't think flexible / part time furlough was available until July.

During the summer she went back to full time hours. When we went into tier 4 at the end of last year, she was put on reduced hours and they reduced her wage.

The company is small, about 20 employees. I understand that the company being on the list don't necessarily mean they are claiming for her but I don't know why they would claim for others but not her.

It could be that I don't understand the system so any advice would be welcome.

Thst was the first list published for furlough and just lists employers. The January list due out any time now will also list the amount claimed by the employer within bands. Also if she sets up an hmrc personal tax account hmrc are going to be including information in there if furlough has been claimed for the employee

I don’t understand your posts, why do you think it’s fraudulent? Employers can reduce hours and claim furlough to make it up to their contracted hours.
A family member works in a nursery but they’re not as busy as usual so if she isn’t needed the full day she gets furlough for the hours not worked that are in her contract.

You don't need advice @Watermelons29, because you aren't involved enough to have the information. To confirm details people would need to know the type of contract she has, previous pay rate and hours, current payments and hours (which should be detailed on a payslip along with furlough amounts). If you think it's fraud then report it to HMRC.

Sorry, the issue is that they are only paying her for the hours she works and no additional furlough amount.

Have you spoke to her about it?

We have flexi furloughed 10 staff out of 200 so we are on the list but it doesn't mean we are claiming for everyone.

There's a difference between reduced hours and furlough. If she works 3 days and is furloughed for 2 then she should be paid 80% of those 2 days. However the employer still has to pay NIC and pension. They may have furloughed some staff and just reduced hours for others to minimise cost as much as possible.

@Watermelons29

Before she was working five days a week, until lockdown 1, when her hours reduced but I don't think flexible / part time furlough was available until July.

During the summer she went back to full time hours. When we went into tier 4 at the end of last year, she was put on reduced hours and they reduced her wage.

The company is small, about 20 employees. I understand that the company being on the list don't necessarily mean they are claiming for her but I don't know why they would claim for others but not her.

It could be that I don't understand the system so any advice would be welcome.

You don't understand, I'm afraid.

Look, HMGov get 2 bits of information every month regarding furlough payroll. The first bit is her actual pay - what she has earned. They get sent more or less what is on her actual payslip - what is on everyone's payslip in fact. They get sent this on payday or earlier.

The 2nd bit of info is the furlough claim itself.

If those 2 things do not match then it would raise a flag immediately. So if her payslip states the correct hours she has worked and she has been paid for what is on her payslip, then there can be no fraud.

It sounds to me from what you say that she has simply been paid for every hour she has actually worked - ie she has never been on furlough at all. This would be because her work has not actually been eligible for furlough - that is, because her hours have been reduced/changed for other reasons not connected with Covid. Many employees have variable work hours perfectly normally - seasonal workers for example.

Other employees may have had to be furloughed because there is no work for them as a direct result of covid.

It sounds to me that her company have behaved in an exemplary fashion.

Agree with all previous posts where people have explained it very simply.

Sounds perfectly reasonable to me. Huge difference between a reduction in hours. And furlough pay.

@Watermelons29

Sorry, the issue is that they are only paying her for the hours she works and no additional furlough amount.

In that case, they aren't claiming furlough for her; they may feel covid isn't relevant to her reduction or they may not want to pay their contribution.

Haffiana- it wouldn’t raise a red flag as long as she has income reported to hmrc for the month through the payroll. The payslip doesn’t have to split between salary and furlough it’s just reported through the payroll as one figure per employee so all hmrc know is that she’s had some sort of pay that month.

For the furlough claim the furlough is not input per employee it’s just one total for all employees furlough for the month and then just names and ni numbers of employees. As long as the ni number matches someone who was on the payroll thst month there’s no way of hmrc knowing if furlough being claimed has been paid to an individual or not unless they raise a seperate enquiry. I’ve been doing furlough claims for 20 to 30 companies a month since it started and I’ve not had one enquiry yet. There is definitely a massive amount of fraud within the furlough scheme as it’s so easy to claim the money even if it’s not due and I expect it’s something hmrc will be looking into for years to come to try and recoup some of the money. This is not saying thst the ops friends company is commiting fraud but they could be, there’s no way to tell. Once hmrc start releasing further information which is due anytime now then an individual employee will be able to check if a company has claimed furlough for them, I expect a lot of the fraud will be picked up this way by employees whistle blowing

@Morph2lcfc

Haffiana- it wouldn’t raise a red flag as long as she has income reported to hmrc for the month through the payroll. The payslip doesn’t have to split between salary and furlough it’s just reported through the payroll as one figure per employee so all hmrc know is that she’s had some sort of pay that month.

For the furlough claim the furlough is not input per employee it’s just one total for all employees furlough for the month and then just names and ni numbers of employees. As long as the ni number matches someone who was on the payroll thst month there’s no way of hmrc knowing if furlough being claimed has been paid to an individual or not unless they raise a seperate enquiry. I’ve been doing furlough claims for 20 to 30 companies a month since it started and I’ve not had one enquiry yet. There is definitely a massive amount of fraud within the furlough scheme as it’s so easy to claim the money even if it’s not due and I expect it’s something hmrc will be looking into for years to come to try and recoup some of the money. This is not saying thst the ops friends company is commiting fraud but they could be, there’s no way to tell. Once hmrc start releasing further information which is due anytime now then an individual employee will be able to check if a company has claimed furlough for them, I expect a lot of the fraud will be picked up this way by employees whistle blowing

Yes, it is reported as one figure, but they still have to match.

The check and balance here is whether the individual's payslip matches what they have been paid. In this case the person has worked x hours and has been paid for x hours.

If the company has in fact claimed for y hours then they would need to fudge their total payroll figures for rti and also produce fake payslips. This would mean fake tax, fake NI, and fake pension contributions. Very, very difficult to get away with that, and very easy for the employee to check without needing further HMRC info - particularly the pension payment.

“Yes they are reported as one figure but they still have to match”

What has to match? As long as the total furlough isn’t more than the total gross reported under RTI then nothing has to match.

There’s isn’t a requirement to show actual hours on the payslip especially if the person in on salary rather than hourly rate (usual hours are reported to hmrc through RTI but this can be in a banding).

You only need to report hours on the furlough claim if it’s flexible furlough.

So for example if the employees usual gross is £1000 and they are working a 4 day week so being paid £800 a month then if the employer were to claim £800 as furlough there’s nothing in hmrcs system that could pick this up. Also if the employee wanted to say they were on flexible furlough they could enter some false amount of hours and any amount of pay and hmrc system would have no clue if it was correct or not. It will only ever get picked up if it gets an enquiry and is looked at properly.

The fraud checks within the cjrs system are virtually non existent, but to be fair to hmrc they developed the system and got it up and working within a few weeks which suprised me as usually systems that have took years don’t even work but this was at the expense of it being massively open to fraudulent claims. There are companies that have had all their staff working the entire time yet have claimed for them all being on furlough and the system has no way of picking this up, although these cases will hopefully be picked up over the fullness of time and the companies heavily penalised,

So for example if the employees usual gross is £1000 and they are working a 4 day week so being paid £800 a month then if the employer were to claim £800 as furlough there’s nothing in hmrcs system that could pick this up. Also if the employee wanted to say they were on flexible furlough they could enter some false amount of hours and any amount of pay and hmrc system would have no clue if it was correct or not. It will only ever get picked up if it gets an enquiry and is looked at properly.

HMRC can compare furlough claim vs rti. It is a simple piece of math that can be done automatically.

If employees usual gross is £1000 then tax, NI and pension on £1000 would need to be declared and paid, both er and ee. If £800 is paid to the employee instead, and that £800 is claimed as furlough @80% on the full £1000, then the employee is paying tax, NI and pension on £800 and not on £1000. The P60 figures and payments would need adjusting to cover the fraud, and the pension figures would not match.

Not easy to do, and not really worth it either.

Where fraud is being committed it will be almost always where employees are working full or part time time and furlough is being claimed as if they were not working at all. That is why HMGov will be publishing company furlough data.

I agree most furlough fraud will be where employees are working and the company is claiming furlough however what I’m trying to explain is that hmrc have no way of knowing how much furlough is being claimed for an individual employee so can’t just compare it to the figure on the payroll where they do have individual gross for employee. When you enter the furlough claim you only enter one total which is for all the employees on the claim so hmrc have no way of knowing how much of that total relates to each employee, you don’t enter a furlough amount per employee. All hmrc can do is take the total gross on the furlough claim and compare it to the total gross on the furlough to make totals aren’t more but they can’t compare it by employee as they don’t have the information to be able to do that. I have only done claims for less than 100 employees so it may be different on furlough claims with over 100 employees on the claim as I know they can be submitted in a different way