A suspected furlough fraud worth more than £70,000 has led to two people being arrested.
HMRC said officers attended homes in Romford and Walthamstow in north-east London where a 43-year-old accountant and 51-year-old company director were arrested.
It is believed to be the first case of HMRC officers arresting those who have fraudulently claimed cash under the government’s Job Retention Scheme, launched by chancellor Rishi Sunak during lockdown.
Thousands of companies are being investigated by HMRC after it was revealed 30,000 furlough scheme claims had been rejected.
Car dealers have extensively used the scheme to furlough staff during the pandemic and whistleblowers have reported to Car Dealer that many have being doing so incorrectly.
While the two arrested are not thought to be connected to the car industry, the female director is suspected of fraud by false representation and money laundering, while the male accountant was arrested on suspicion of fraud by false representation, fraud by abuse of position and money laundering.
Digital devices and business records were seized in the operation. Both have been released under investigation.
Earlier this week, officials admitted fraudulent furlough claims and errors has resulted in up to £3.5bn being paid out to companies incorrectly.
HMRC’s top civil servant Jim Harra admitted that the tax inspectorate believes between five and 10 per cent of the £35.4bn paid out to companies has gone to the wrong places.
He said that somewhere between £1.75bn and £3.5bn could have been paid out wrongly.
The programme covers up to 80 per cent of an employee’s salary if they cannot work and are furloughed because of the Covid-19 pandemic.
Terry Braithwaite, assistant director of the Fraud Investigation Service at HMRC, said: ‘The CJRS is part of the collective national effort to protect jobs.
‘While most employers have used the scheme responsibly, this is taxpayers’ money and HMRC will not hesitate to act on reports of abuse of the scheme.’
HMRC has paid out more than £35bn through the CJRS to support 1.2m employers and 9.6m furloughed jobs.
Braithwaite called on staff to whistleblow if they suspect furlough fraud by their employer.
HMRC said there were four lines of defence against fraud that are baked into the scheme.
They include the fact that employees need to have been on payroll before March 19, and the employers must be authenticated by HMRC.