A company director and an accountant been arrested over a suspected £70,000 fraud involving the coronavirus furlough scheme.
HM Revenue and Customs said its officers arrested the two people aged 51 and 43 on Thursday after attending two homes in Romford and Walthamstow in east London.
The arrests were announced as Chancellor Rishi Sunak was urged to consider a targeted extension of the Coronavirus Job Retention Scheme.
MPs on the Treasury Select Committee said that bringing it to an abrupt end next month risks putting hard-hit firms out of business and creating mass long-term unemployment.
Since it was the launched on 20 March, around 9.6 million workers have been supported by the scheme, which covered up to 80 per cent of an employee's salary.
However Mr Sunak - who has already extended the furlough several times past its original end date of 31 May - has insisted it will end on 31 October. Instead, firms will be paid a £1,000 "job retention bonus" for every furloughed employee brought back to work.
The government has so far paid out £35.4bn in furlough cash, according to the latest figures. However HMRC estimates that between 5 per cent and 10 per cent - up to £3.5bn - could have been wrongly issued through error or as a result of fraud.
Earlier this week Jim Harra, the top civil servant at HMRC, said the agency was targeting fraudsters rather than employers who made "legitimate mistakes" - although they expected any excess to be repaid.
The first arrest in connection with an alleged fraud on the furlough scheme was made on 8 July, when a 57-year-old man was questioned over claims for £495,000.
Richard Las, acting director of the Fraud Investigation Service at HMRC, said: “The Coronavirus Job Retention Scheme is part of the collective national effort to protect jobs. The vast majority of employers will have used it responsibly, but we will not hesitate to act on reports of abuse of the scheme.
“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. Anyone who is concerned that their employer might be abusing the scheme should report it to HMRC online.”
Additional reporting by Press Association