Businesses risk criminal prosecution if they contravene government’s job retention scheme

Harrison Drury’s executive chairman, John Chesworth, warns that businesses flouting the government’s Coronavirus Job Retention Scheme (CJRS) may face investigation, prosecution or even jail.

John highlights the risk to businesses who abuse, misinterpret, or contravene the scheme that was set up by the government to protect employees and businesses during the coronavirus crisis.

The scheme entitles businesses to ‘furlough’ employees from March onwards and claim up to 80 per cent of their wages subject to a cap of £2,500 per month per employee.

Business owners can then claim the money back for furloughed employees using HMRC’s dedicated online portal which will be operational mid-April.

John said: “Despite it being clearly stipulated in the scheme guidelines that furloughed employees must not work during the furlough period, there are increasing anecdotal reports of businesses furloughing staff, who then carry on working for the business.”

The government faces billions of pounds in claims for the first three months alone under the scheme with HMRC’s chief executive urging workers to report rule-breakers and flouters and have set up a hotline for people to report employers who abuse the scheme.

He added: “The government’s colossal financial intervention in the economy is a lifeline for businesses and employees alike, and throughout many sectors of our economy. Claiming government assistance for workers who continue to provide services to a business while on furlough is in clear breach of CJRS rules.

“However, furloughed employees that have the capacity to work remotely from home, may, in fact be working in ignorance of the scheme’s restrictions. Their employer may therefore be inadvertently breaching the rules.”

Business directors and officers risk prosecution, heavy fines and even criminal conviction for declarations made when applying to the scheme if they are proven to be incorrect and/or misleading.

If a decision is taken to prosecute a company which is an owner-managed SME, it is possible that proceedings against a director or other officer of the company will also take place.

It is anticipated that in due time, HMRC will undertake wide-ranging and extensive investigations into businesses who have claimed under the scheme and have received significant amounts of money from it.

John added: “If a business owner is considering furloughing employees and claiming under the scheme, or has already furloughed members of staff, I strongly recommended they seek both employment and regulatory advice before making any claims on HMRC’s online portal.

“Getting advice early on, will not only ensure employers fully benefit financially from the scheme, but that they are also totally aware of the consequences of flouting the scheme rules.”