A man from the West Midlands is the first person to have been arrested over suspected fraud with regard to the government’s job furlough scheme.
The 57-year-old was arrested on 8 July in the Solihull area as part of an investigation into a suspected £495,000 fraud of the coronavirus job retention scheme.
The man’s computers and other digital devices were seized, and funds in a bank account relating to his business frozen.
He was arrested by officers from HM Revenue and Custom, which is responsible for overseeing the furlough scheme, under which the government pays 80% of the wages of staff, up to £2,500 a month, for those who have been stood down from work during the pandemic.
Richard Las, acting director of HMRC’s fraud investigation service, said: “The coronavirus job retention scheme is part of the collective national effort to protect jobs.
“The vast majority of employers will have used the [scheme] responsibly, but we will not hesitate to act on reports of abuse of it. 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 man was also arrested in relation to a suspected multi-million pound tax fraud and alleged money laundering offences, HMRC said.
HMRC said it had received more than 4,400 reports of suspected fraud linked to the scheme up until the end of June, more than 800 of which it had received within a month of the start of the furlough scheme.
The authority is calling on anyone who is concerned that their employer might be abusing the scheme to report it to HMRC online. It is not possible for people to call the government’s fraud hotline because security measures now prevent calls being diverted to the mobile phones of HMRC employees working from home.
HMRC said that 1.1 million employers have claimed more than £27.4bn through the furlough scheme, which has supported 9.4 million people.
The scheme has been extended until October, although employers will have to start contributing towards staff costs from August.
On Wednesday, the chancellor, Rishi Sunak, announced in his summer statement that companies could obtain a £1,000 bonus for each member of staff they brought back from furlough and employed until at least the end of January.
To claim furlough payments on behalf of employees, companies must be known and authenticated by HMRC, and workers need to have been on the company payroll on or before 19 March.
The Guardian has previously received reports from members of the public who say that they have been asked to work for their employer while furloughed.