Martin Lewis says furlough system has ‘chasm of holes’
Furlough fraud proved to be a significant issue in 2020 as it was estimated billions of pounds of taxpayer’s money was lost due to a “hasty” roll-out of the Job Retention Scheme. In late October, Meg Hillier, a Chair of the Public Accounts Committee, warned: “Our finding of the astonishing lack of economic planning for a pandemic shows how the unacceptable room for fraud against taxpayers was allowed into the Government’s hastily drawn up economic support schemes.”
The direness of the situation was recently laid bare by RPC, the City-headquartered law firm, who looked into HMRC’s own figures.
It was revealed that HMRC made 18,464 requests to access communications data like phone records and web browsing histories to aid its criminal investigations last year, up from 18,263 the previous year.
RPB detailed HMRC may request these phone records from telecoms networks to aid it in its investigations into suspected furlough fraud.
As the organization explained: “HMRC could examine the phone records of an employer to determine whether or not they have been making phone calls to an employee during the period when they were supposedly on furlough.
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“A high number of calls might indicate the employee was actually working and the furlough claims were fraudulent.
“HMRC can request data held by telecoms operators including the time, duration and location of a phone call as well as the number dialled.
“It can also request a list of websites visited by an individual from their internet provider.”
On top of the furlough instances, RPC detailed the many applications to acquire communications data were for the prevention and detection of other serious crimes, including tax evasion.
Whistleblowing reports of suspected tax evasion jumped by 10 percent in 2020, up to 73,000 in total and as such, RPC warned there is significant scope for HMRC to further increase the number of requests it makes to access taxpayers’ phone records.
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Adam Craggs, a Partner and Head of Tax at RPC, commented on this: “Most taxpayers are unaware of the extensive investigative powers which HMRC has at its disposal and it will not hesitate to use these powers if it suspects fraud.”
“As HMRC shifts its focus to furlough fraud, phone and web browsing data is likely to be a hugely valuable source in identifying those who may be defrauding the public purse.
“Digital data is increasingly important in the detection of fraud, but it is critical that HMRC takes care to ensure that the correct legislative basis is used in its fight against fraud.
“HMRC must not misuse its investigatory powers and ensure that only lawful, necessary and proportionate applications for communications data are made to the OCDA.”
It’s possible furlough problems could continue into 2021 as Rishi Sunak has extended the support to at least April.
In December, the Chancellor confirmed the furlough scheme will extend into Spring, with affected employees set to see 80 percent of their salary covered.
At the time, Rishi introduced the extension with the following comments: “Our package of support for businesses and workers continues to be one of the most generous and effective in the world – helping our economy to recover and protecting livelihoods across the country.
“We know the premium businesses place on certainty, so it is right that we enable businesses to plan ahead regardless of the path the virus takes, which is why we’re providing certainty and clarity by extending this support, as well as implementing our Plan for Jobs.”
Employers will only be required to pay wages, National Insurance Contributions (NICS) and pensions for hours worked; and NICS and pensions for hours not worked going forward.
As it stands, the Job Retention Scheme has protected nearly 10 million jobs according to the Government’s figures and this does not factor in the state’s other support measures.
Rishi Sunak also extended access to the Government’s loan schemes and Alok Sharma, the Business Secretary, welcomed the announcement: “While our loan schemes have provided a vital lifeline to millions of firms across the country, we know that business owners need additional certainty as we head into the New Year.
“Extending Government-backed loan schemes will give companies right across the UK the finance they need to support, protect and create jobs as we build back better from the pandemic.”
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