A former employee at KAU Media group had previously sent a formal complaint to HMRC with allegations of ‘furlough fraud’, but received no response.
In March, reports of possible furlough fraud topped 26,000, raising fears that chancellor Rishi Sunak’s job protection scheme has been abused.
HMRC has refused to comment on KAU Media Group, saying it has to protect confidentiality rules.
A spokesperson for HMRC today insisted: “We take all allegations seriously.” They said that all complaints are “carefully assessed and the most appropriate action is taken”.
They added: “We have a Taxpayer Protection Taskforce set up to combat COVID scheme fraud. We’ve already made five arrests across the UK for suspected CJRS fraud and there are other criminal investigations underway.”
Lib Dem MP Sarah Olney, who sits on the Public Accounts Committee, said the government had “failed spectacularly” in ensuring value for money during the pandemic.
She said that openDemocracy’s investigation into KAU Media Group “makes for appalling reading,” adding: “Without a comprehensive list of companies claiming support, we are unable to determine whether this is the exception or the rule.”
The SNP's Alison Thewliss, who is a member of the Treasury Select Committee, said: "This isn't the first time concerns have been raised about the legitimacy of COVID-19 contracts, and it just isn't right that public money has been handed out to abusive bosses who appear to care little for the welfare of their employees."
"The exploitation of employees through the furlough scheme is a scandal, which must be taken seriously by the UK Government and HMRC. It puts employees in an impossible position, where speaking out about their exploitation could cost them their job."
A catalogue of evidence seen by openDemocracy and The Times showed that staff at KAU Media Group were expected to continue working while on furlough.
Speaking to openDemocracy on the condition of anonymity, more than half a dozen former employees said they were scared of being fired and left unemployed if they spoke out.
Instead, they continued to work on digital marketing campaigns for private clients, while being paid just 80% of their normal salaries.
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