Coronavirus Fraud Alert

As financial support from the government is withdrawn, HRMC's focus has switched to identifying fraudulent claims, particularly in relation to the Furlough and SEISS schemes.

More than 9.5m people have been put on furlough at some point since the Coronavirus Job Retention Scheme (CJRS) was introduced in March at a cost of more than £30bn.*

However, now that the scheme is winding down and due to close at the end of October, HMRC is focussing on identifying employers who may have made false furlough claims, whether knowingly or not.

The main fraud HMRC is investigating is where employees have continued working, either part-time or ad hoc, whilst being declared furloughed. Other examples include employees who weren’t told they were officially furloughed under CJRS and employers claiming for ‘ghost’ employees.

What powers does HMRC have?

On 22 July 2020 the Finance Bill 2020 became law. This new legislation enables HMRC to fine employers for false claims, whilst directors of liquidated companies can be found personally liable for false claims, as well as possibly facing imprisonment.

What’s fraudulent?

To have made a fraudulent claim companies must have been found to be ‘deliberately making an incorrect claim’ and ‘deliberately not using the money to reimburse wage costs for furloughed employees’.

For the majority of companies abiding by the rules, this should be some reassurance; however, it was a turbulent period when the scheme launched with many claims being submitted quickly. It’s therefore advisable to check that all the claims you’ve made are correct and rectify any errors that have occurred.

August deadline

Employers have until 20 August 2020 to rectify and pay any false claims (whether made in error or deliberately) without incurring any additional penalties.

Some reports suggest that around 35% of workers have been asked to work by their employers whilst on furlough, so the scale of the fraud is likely to be significant. In some cases, the employer may not be fully aware that they have broken the rules and made a false claim.

We are therefore expecting HMRC to start conducting random checks, so it is advisable to have all your CJRS paperwork up to date and ready to present in case you are investigated.

For further information or advice, please contact Jon Miles on 01225 325580.

*source: gov.uk