Furlough fraud and directors’ liabilities

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The spotlight is turning to company directors as HMRC continues to crack down on fraudulent claims for furloughing staff.

The latest figures show that over 11 million workers have been furloughed in the UK and 41% of employers had staff furloughed. As of January 2021, HMRC had received over 21,000 reports of potential furlough fraud.

The March 2021 budget included an investment of £100 million for the creation of a taskforce to tackle fraud within the furlough scheme.

Among the HMRC powers are the ability to charge individual directors found to have played a role in fraudulent claims under the Criminal Finances Act 2017.

HMRC Attention is particularly focused on claims by insolvent companies or companies where there is a “serious possibility” of insolvency. Directors may face claims for breach of their statutory duties and disqualification under the Company Directors Disqualification Act 1986.

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