UK authorities have made their first arrest over alleged furlough fraud, raiding a property and freezing a bank account linked to the suspect’s firm.
A 57-year-old man was arrested on Wednesday in Solihull, near Birmingham, on suspicion of fraudulent claims worth £495,000 ($622,806) under the government’s furlough scheme. He has since been released under investigation.
The UK government has handed firms £27.4bn in wage subsidies for 9.4 million furloughed staff since launching the coronavirus job retention scheme (CJRS).
“The vast majority of employers will have used the CJRS responsibly, but we will not hesitate to act on reports of abuse of the scheme,” said Richard Las, acting director of HMRC’s fraud investigation service.
“This is taxpayers’ money and any claim that proves to be fraudulent limits our ability to support people and deprives public services of essential funding.”
The raid saw computers and other devices seized. The man was also arrested in relation to a suspected multi-million pound tax fraud and alleged money laundering offences.
Another eight men were also arrested across the West Midlands as part of this “linked investigation,” according to HMRC.
HMRC highlighted several measures built into the scheme designed to protect against fraud, including accepting claims only from employers “known and authenticated” by the government.
It said all claims were checked within 72 hours, and pointed to a condition that employees have to have been on payroll 19 March.
HMRC said in a press release this cut-off date prevented “the use of fake employees” enrolled after the scheme’s launch. But it has proved controversial, as many March new starters had not had their pay data submitted to HMRC by 19 March and were thus ineligible for the scheme.
Officials also urged anyone who suspected their employer was abusing the scheme to report it online.