Viewing 40 posts - 1 through 40 (of 116 total)
  • Employer committing fraud – opinions please
  • Hello.

    Posting under another name for obvious reasons.
    I am the accountant for my employer so know a wee bit more about their finances than most staff.
    It’s a small company, under twenty staff. Badly in debt, about 1.5x turnover and making losses. It is being kept alive by loans from a sister company.

    The finance director, my boss, has decided that roughly three quarters of the staff, including me, should be ‘furloughed’. The taxpayer is therefore paying 80% of their salaries. However, it has also been made clear that these staff are expected to work from home. This is costing the taxpayer roughly £29k/month. I am aware this is illegal and am not comfortable with it. I have raised this with the finance director and have been told ‘it will be fine’
    Seven of the staff are to be properly laid off next month, we are closing an office for other reasons (this is the right thing to do, it was a bad idea to open it in the first place) This will then leave four or five stff ‘furloughed’ but actually working from home.
    I know this applies to some staff in the sister company too, at least five, probably more, but I don’t know the sums involved.
    The sister company is struggling ust now and is no position to offer further loans.

    So,
    Do I ignore it completely and let the taxpayer continue paying our salaries? I am not happy with this.
    Do I report it to HMRC? This is the right thing to do but will very likely leave me out of a job and there are no others round here (very rural area, and not a wealthy one) Never mind personal repercussions, it will send the company under.
    I have much evidence of wrongdoing. Should I hold onto it and report it when I leave and no-longer need the job? I could use it to ‘negotiate’ a better redundancy package if I’m next out but that sounds too much like blackmail and probably isn’t wise.
    If ‘someone’ notices and questions it (HMRC or the auditors for example, unlikely but possible) I am not prepared to lie about it, if it is found out I have lied I would struggle to get another job ever again. At the moment I haven’t drawn attention to it, but I won’t lie if questioned.

    I know at least two other staff are aware this is illeagl and are equally uncomfortable about it.

    I can’t ‘blow the whistle’ internally as it is the most senior memeber of staff responsible, there is no-one else to blow the whistle to. The only other director knows what is going on (but I don’t know if he knows it’s illegal). I am reluctant to rock the boat as he is the one deciding on the current redundancies.

    What would STW do?

    Thanks.

    This will be rife.

    If it keeps the company afloat, and people in jobs, then to me that poses an even tougher decision.

    Premier Icon Poopscoop
    Subscriber

    I reckon this is hugely common at the moment.

    I know 2 people that are being…. “compelled” to work whilst furloughed.

    I’m honestly not sure what to advice though mate.

    It’s a tough one on a moral level.

    I suspect it is very common.
    Does this mean:
    A) Far too much effort for HMRC to go digging into small ones like this
    B) Once it’s all blown over they’ll be checking everybody to recoup as much as they can

    And it being very common doesnt ease my conscience.
    I have the added problem that I am the accountant and am supposed to know stuff like this. If we do get caught everyone else could plead ignorance. The best I could come up with would be ‘I was just following orders’ This may or may not wash as far as professional implications go, I am fully aware that I am supposed to report it and could be in trouble if I don’t.
    But I could be out of a job if I do…

    Premier Icon Poopscoop
    Subscriber

    Outs a horrible call to make op. I’m not envious.

    No idea how efficient the attempts will be to recoup the money. I suspect most companies will get away with it as it will be such a huge and expensive task.

    The government obviously knew it would get abused but it’s worth it for the greater good. Which it is.

    One other consideration.
    If one of the staff being made redundant (production, quality control, customer service, designers and credit control so not necessarily much knowledge of this) get the hump and become aware that they were being asked to break the law, they may decide to report it just to get back at us. Although the redundancies are necessary they have been handled badly and morale is shocking.
    It is unlikely that HMRC or the auditors will notice on their own, this is more likely

    Premier Icon flicker
    Subscriber

    Would this not be considered tax fraud? and you knowingly turning a blind eye to it? struck off or worse? How likely are you to be chucked under the bus by your boss if your firm are found out.

    Premier Icon Poopscoop
    Subscriber

    I think all things consisted id stay quiet.

    It might be the lesser of two evils on balance. Not without risk obviously but neither option is.

    EDIT: Just saw your last post op. I’m back on the fence again.

    I bet there are many being put into the unenviable position you are over this.

    baboonz
    Member

    Edit: the device given below is probably the best.

    Premier Icon theotherjonv
    Subscriber

    I would have thought that as a professional (chartered??) accountant you have an obligation to report accounting and business malpractice, and to adhere to proper law and governance.

    If you want to give the employer chance to do the right thing, remind them of this obligation and give them chance to act. If they don’t you have to report; I would imagine you could be prosecuted or struck off otherwise.

    Nasty situation but are your prepared to potentially lose your job AND future livelihood because of their rule breaking?

    [edit – you say HMRC or auditors have little chance of finding out otherwise; but you also say a disillusioned employee could well doff them in. And if they did find out, you’re partly responsible and ‘just following orders’ as a professional is not an answer]

    Send them a series of arse covering emails about how you are uncomfortable with the situation and BCC them to your home email address?

    Find another job ASAP.
    Do it on your terms now rather than theirs later when it inevitably goes tits up.

    Would this not be considered tax fraud? and you knowingly turning a blind eye to it? struck off or worse? How likely are you to be chucked under the bus by your boss if your firm are found out

    Yes.
    I am at the moment
    Probably, that’s what I’m worried aoout
    He’s in it far worse than I am and I have records elsewhere than my work computer showing I was told to do it.

    Premier Icon epicyclo
    Subscriber

    Cover your arse.

    A written memo to the directors that you are unsure of the fine nuances of the legal position and that they may be at risk. Recommend they seek legal advice.

    You’re in a shitty position, but anyone crooked enough to cheat the tax dept is crooked enough to throw the accountant under the bus. I’ve seen it happen several times, let’s blame the accountant, we’re just businessmen, he’s the numbers guy. That’s why you need to send that letter asap.

    I suggest you regard the job as dead already. A resignation may get you a good package.

    And above all, you should seek legal advice on your own position.

    Good luck.

    Premier Icon theotherjonv
    Subscriber

    I put as an edit but it’s moved on so reposting

    [edit – you say HMRC or auditors have little chance of finding out otherwise; but you also say a disillusioned employee could well doff them in. And if they did find out, you’re partly responsible and ‘just following orders’ as a professional is not an answer]

    Premier Icon Cougar
    Subscriber

    From an employee perspective, if I were told I was being furloughed but that I was expected to carry on working I would be seeking clarification as to which it was as these two scenarios are mutually exclusive. It’s like being sacked but still being expected to turn up to work on Monday. If you take the national bailout out of the equation then the question becomes “would you work for free?”

    From a HMRC perspective, why would an anonymous tip-off leave you out of a job?

    I’m not a chartered accountant, just qualified by experience, fairly low in the accountant pecking order. No professional bodies involved. However, any involvement in things like this would still severley inhibit my chances of getting another job (I actually have a criminal record for some animal-rights activities but since that wasn’t fraud/money-laundering/etc that’s fine, they aren’t fussed about minor things like murder or my vandalism record)

    I have started looking for another job but there was next to nothing around here before all this kicked off and now exactly nothing, my only chance would be to change from a very very pleasent 12 mile commute through a trail centre to 30 miles the other way to a major city.

    Premier Icon Cougar
    Subscriber

    Not quite an edit cos I CBA – what Jon said.

    Premier Icon tjagain
    Subscriber

    Do you not have a legal duty to report it? If you don’t are you not also committing a criminal offense ( as an accessory)

    I’d have no hesitation in dropping them right in it.

    As above – ass covering emails copied to your home email then resign and dob ’em in

    hotstuff
    Member

    You need to hold your head up and do what you know is right. Any investigation is going to raise anomalies in the finances for the period and as the accountant I’d have thought that you may have some awkward questions to answer?
    Sounds as if the writing is on the wall for the company anyway, why consider possibly giving yourself a black mark for other prospective employers to see?

    From a HMRC perspective, why would an anonymous tip-off leave you out of a job?

    Because it would send the company under. We really are broke and barely staying alive as it is. It s a tiny company with (relatively) massive debts

    Would this not be considered tax fraud? and you knowingly turning a blind eye to it? struck off or worse? How likely are you to be chucked under the bus by your boss if your firm are found out.

    This.

    You’re an accountant, presumably qualified?

    Is this worth you being struck off?

    Premier Icon flicker
    Subscriber

    Yes.
    I am at the moment
    Probably, that’s what I’m worried aoout
    He’s in it far worse than I am and I have records elsewhere than my work computer showing I was told to do it.

    He may well be in it more than you but the fact he told you to do it doesn’t absolve you as you know better. You need to look after number one, I can’t see any other options other than speaking with your boss or speaking directly with hmrc (I’m assuming they will have a whistleblower hotline of some sort)

    Sounds like you’re in the hardest of the situations here based on you legal obligations.
    If there’s no paper trail of your current knowledge of this, perhaps negotiating a redundancy settlement now and walking would be your best move?
    As you say, under audit, your head is on the block.

    You guys are all right, the only problem I have is finding a half-decent alternative job anywhere nearby. This isn’t quite the middle of nowhere but there is very little about, and everyone knows everyone

    Premier Icon ctk
    Subscriber

    Absolutely rife at the moment if it helps ease your conscience.

    dyna-ti
    Member

    Turn it in soon as. Because sooner or later it will break and all involved will be under investigation. Not the best thing to have on any cv or have knowledge of your previous employment being crooked, Many employers might just bin it rather than take the chance.

    A similar thing happened to one of my relatives when he took over position as chief executive of a softwear company called Torex Retail
    https://www.sfo.gov.uk/2013/06/21/final-conviction-torex-retail-false-accounting-case/
    Discovered major dodgy dealings and decided to take it to the authorities before he got caught up in it and could have affected his own reputation and standing. This is tied in with RBS fleecing medium and small businesses and the last I heard is his action of suing RBS for £2 billion has been ruled against by the high court(probably due to government involvement) but that action is far from over and on going in the US, where hopefully more access to documents will be allowed.

    Absolutely rife at the moment if it helps ease your conscience.

    if I was in any other job it would

    So, how’s this for a plan?
    .
    1) Cover arse as much as is feasible
    2) Look for new job
    3) Once in new job report them
    4) Hope 3 happens before it gets noticed

    5) Hope 3 happens before they go bust and that’s on your CV as well as the fraud that the administrators uncover.

    Premier Icon reluctantjumper
    Subscriber

    I would report it. I will always try and do the right thing in any situation, even if it is to my detriment. The fact that you’re asking the question means that, deep down you know you need to report it but need the backup of others to do it.

    HMRC Fraud Reporting Page.

    It may well be rife right now but that does not make it right.

    The fact that you’re asking the question means that, deep down you know you need to report it

    True.It is the right thing to do.
    But is likely to cost me my job, just because I don’t expect the company to survive it. Not reporting it (yet?) at least buys me time to find abother.

    Anyone here know anything about whistle-blowing? I’m vaugly aware of the rules protecting me from ‘retribution’ by my employer or other memebers of staff, but what if the employer goes under, is there any sort of income-protection or would I be on the dole? I suspect the later since I’ve never heard of the former

    .

    I have started looking for another job but there was next to nothing around here before all this kicked off and now exactly nothing, my only chance would be to change from a very very pleasent 12 mile commute through a trail centre to 30 miles the other way to a major city.

    This is the big thing holding me back, the lack of alterantive employment in the area, would be much easier if I lived in a city. I earn roughly the national average wage, bit less, but round here that is very good. The chances of finding similar are very, very slim.

    I know this applies to some staff in the sister company too, at least five, probably more, but I don’t know the sums involved.

    Also this.
    The sister company is one of the biggest employers in the county, 120-130 staff. I don’t know their finances as well as ours, they may be in a position to repay their ill-gotten gains, probably could, but if the penalties were harsh it would be a major blow to the area if they went under, and as I say everyone knows everyone…

    Basically I’m ****ed

    Do accountants have a union or anyone you can seek advice from?

    Speaking as a taxpayer, companies that do this can get ****.

    It’s an invidious situation to be in but I think your only real chance is to set out your principles in a way that makes sure they know you are acting out of a moral and professional obligation to be proper despite your love for the company and the great work it does. In that case, the best outcome might be if they agreed to furlough you formally/completely. What the director does with the other employees without your knowledge (is this possible?) is neither your business nor your responsibility. From the business’s perspective, this way they keep you furloughed and quiet. Getting rid of you is certainly not in their immediate interests given that you’re likely to shop them straight away. If they still expect you to commit fraud, then you have a very clear duty to report it.

    Good luck.

    Premier Icon el_boufador
    Subscriber

    From your posts I’m not quite clear whether you are actually in a position of real responsibility (to your empoloyer or to the accountancy profession) or not. I’d probably clarify that before I did anything.

    But it does sound like, either way, the company is in a poor position. Besides the debt, the directors are as you expressed, taking big gambles that they are not in control of. That probably tells its own story about the prospects for the company going forwards.

    Premier Icon el_boufador
    Subscriber

    And yeah as above, can you plausibility deny any knowledge? (Electronic/paper trail etc that proves your knowledge)
    That would be a factor

    Premier Icon andrewreay
    Subscriber

    There’s not a lot of whistle-blower protection I’m afraid. Your income will still be tied to that of your employer, so I don’t imagine you’ll fare any better than your colleagues if a tip off sends your employer under.

    As an accountant though (even if not a member), may just be worth a call to the ICAEW to explain your predicament. They may have something to protect the ‘good’ name of accountants in such a situation, but it’s a long shot.

    In terms of discovery, I’m struggling to imagine a scenario where the auditors don’t pick up on this. Presumably income is being booked by staff that are not working? Also, if the financials are dicey, can’t imagine the auditor will just sign off the books from a ‘great’ year when previous ones have seen money going out at a terrible rate. They’ll be on the rack if there’s a business failure further down the line and HMRC are owed money. So wouldn’t assume this won’t get picked up. Notwithstanding any of your disgruntled unemployed colleagues calling HMRC.

    All of which puts you in a miserable position. I can only suggest a call to the ICAEW and then follow your conscience. If / when it goes to shit, who do you want to see in the mirror?

    Premier Icon reluctantjumper
    Subscriber

    It all boils down to factors out of your control no matter what you do.

    Scenario 1:

    You say nothing, no-one gets investigated as they have far bigger fish to fry and you all somehow live another day.

    Scenario 2:

    You say nothing, the company gets investigated and fined. You walk away unscathed professionally but no job and very little prospect of finding a new one.

    Scenario 3:

    You say nothing, the company gets investigated and fined. You cop some of the blame as you should have reported them. You have no job an no-one will employ you due to your conduct at your current workplace.

    Scenario 4:

    You have a word with the bosses about your concerns, they take offence. They mark your card and you are sure to soon be out of the door. You end up with no job and little prospect of a new one.

    Scenario 5:

    You have a word with the bosses about your concerns, they listen and make things right somehow. The company goes under anyway. You end up with no job and little prospect of another one.

    Scenario 6:

    You report them to HMRC who investigate and fine the company. As the whistleblower you are not blamed so can walk away with your head held high. You have no job and little prospect of finding a new one but your professional status is intact.

    I haven’t gone into whether local would know you caused or contributed to the downfall of a local employer as I don’t know the details of that. It all boils down to which scenario you think best fits your current position. Just don’t forget you’re not currently the one doing wrong here, your employer is. If you do not report your concerns in some capacity you are indirectly condoning what is going on.

    My advice would still to be report it but only you can make that call.

    Premier Icon Cougar
    Subscriber

    How about this:

    If you’re furloughed and not expected to work, you are no longer their accountant and it’s not your problem.

    If however you are expected to work then it’s your duty as a working accountant to report this infraction to HMRC.

    Ask them to pick which one they would prefer.

    Premier Icon timmys
    Subscriber

    …get the hump and become aware that they were being asked to break the law…

    Don’t kid yourself that they might “become aware” they are breaking the law. It’s inconceivable that they don’t already know that this is the case given that it was reported absolutely everywhere that if you are furloughed you could not be asked to do any work at all.

    However, it has also been made clear that these staff are expected to work from home.

    How did this happen? Is there a paper-trail to prove a directive came from your employer? If not, how can you be certain the other employees are actually working?

    Can the management plausibly say we didn’t expect, or know, the employees continued to work?

    EDIT: to add…
    I guess if sales people where still answering phones during office hours and making sales, that’s pretty obvious. But if the nature of your work is such that you could work-from-home anyway and just “keep on top of a bit a paper work” every now and again and just do short bursts of activity at odd hours, would HMRC consider that “working”?? I’m guess you arent still getting your salary paid on top.
    (I have no idea what you are/are not allowed to do when furloughed)

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