The Courier & Advertiser (Fife Edition)
Taxman hunts for false CJRS claims
Businesses emerging from the Covidinduced cocoon of furlough payments used to retain their workforce are now facing the cold wind of scrutiny as HMRC gears up to claw back any cash that may have been handed over in error.
As the Coronavirus Job Retention Scheme (CJRS) comes to an end this week, the message from the tax man is clear – volunteer information about any furlough claims that may have been wrongly submitted and repay the amount owed or face higher penalties, and possibly prison, if it’s found out later claims have been overstated or made fraudulently.
Since March 2020 employers have been able to claim furlough grants covering up to 80% of wage costs up to £2,500 per month per employee with the employer expected to pay a gradually increasing proportion of costs.
The latest available figures show that the government paid out £68.5 billion in Coronavirus Job Retention Scheme grants up to 16 August this year.
In his March budget, the chancellor sent out a strong signal about how seriously the government intends to pursue furlough fraudsters.
He promised a further £100m investment in the 1,250-strong taxpayer protection task force which deals with errors relating to Covid-19 business support schemes.
By the end of March, HMRC had opened almost 7,500 investigations and is now staffing up to cope with the flood of investigations it expects to come.
By June, 28,000 reports of potential furlough fraud had been received. Furlough fraud can take
variety of forms: from claiming CJRS for employees while requiring them to continue working; furloughing ghost employees; or overstating the number of hours that an employee has been furloughed under the “flexible furlough” rules.
A list of all employers who have claimed CJRS since December 2020 is publicly available.
Some businesses will come under the spotlight as a result of tip-offs from existing staff or former workers who know that employers have claimed CJRS but their employees have continued to work.
HMRC will also be interested in businesses that have had an increase in income or have maintained a steady turnover while all their employees were furloughed.
Questions may be raised about hospitality businesses that received money from the UK Government for taking part in the “Eat Out to Help Out” scheme last August if claiming that staff were furloughed at the same time.
HMRC’s recent recruitment drive for investigators may be an indicator of its expectation of an increase in the level of investigations to come.
Employers have 90 days to amend a claim and repay if they realise they may have unintentionally claimed money they were not entitled to.
They are strongly advised to take the opportunity to set their record straight now.
To withhold information could be costly to financial position and reputation and may lead to directors being struck off and, in extreme cases, loss of freedom.