HMRC to clamp down on furlough fraud - what you need to know
- 29th June 2020
The Coronavirus Job Retention Scheme was launched with remarkable speed after the full effects of the pandemic became apparent, but that left little time to consider the ways in which some could take advantage of the system.
Now HMRC is expanding its powers to punish those who are exploiting the system, and they have pledged to hold directors personally liable where necessary.
By the end of May, HMRC had received more than 1,800 complaints about bogus claims.
These ranged from claiming for “ghost” employees to businesses telling furloughed employees to continue working - and, in the worst cases, threatening to sack them if they refused.
For now, HMRC remains focused on implementing the CJRS and other support schemes. However, they have proposed amendments to the Finance Bill 2020 which would expand their powers, allowing them to recoup false claims, hold directors liable, and fine those who have deliberately made fraudulent claims.
HMRC will distinguish between those who have made honest mistakes - the system can be confusing - and those who are clearly guilty of wrongdoing. All businesses should make sure that they have the records to back up their claims; in particular, paperwork such as letters informing staff or seeking their consent.
There is a distinction between what employees may and may not do while furloughed. They may undertake training or volunteer, but they may not perform services or do anything which generates revenue for the business.
Furloughed directors are also not allowed to generate revenue, but they may fulfil their statutory duties. It is best that these duties are restricted to compliance admin, such as filing accounts, as other duties could be considered as performing services or generating revenue, even indirectly.
The need for scrupulous record-keeping will become even more important from July onwards as furloughed employees and directors are allowed to return to work on a part-time basis.
Get your furlough records in order now so that you are ready to respond to any request for information from HMRC. Be aware of fraudulent emails purportedly from HMRC though, and remember that you will never be asked to provide sensitive data by email.
Concerned about your own furlough records? Speak to us at firstname.lastname@example.org
Any news or resources within this section should not be relied upon with regards to figures or data referred to as legislative and policy changes may have occurred.