Fallen foul of furlough?

Since the government introduced the Coronavirus job retention scheme in early 2020, HMRC has been under pressure to recover monies lost to incorrect claims and fraud. Of course, there are numerous reasons for incorrect claims, many innocent and unintentional.

Businesses affected should seek expert support to minimise their exposure to penalties. Getting the right professional advice without delay can keep the damage to a minimum.

Businesses have 90 days after making an incorrect claim to either repay the funds or make a voluntary disclosure. Once the 90-day window expires, failure to notify HMRC of the sum incorrectly claimed can result in the liability increasing due to penalties and interest.

According to HMRC, it has collected around £800 million from businesses and expects this sum to increase to over £2.3 billion by the end of March 2023. Most investigations are on a civil basis, with criminal proceedings reserved for the most serious cases.

HMRC identified early on that the furlough and other Coronavirus support initiatives were open to abuse. It set up the Taxpayer Protection Taskforce (staffed by 1,265 investigators) to crack down on businesses that have wrongly claimed Coronavirus support. £100 million has been ring-fenced for the taskforce to target businesses suspected of exploiting the scheme for financial gain.

HMRC has been trawling through the PAYE data it holds and comparing it with the information provided when furlough claims were made. There are also nearly 100,000 reports from whistleblowers to HMRC’s fraud hotline. HMRC published the names of companies using the scheme since December 2020, so employees can check if their employer made incorrect furlough claims.

The legislation introduced by the Treasury allows HMRC to recover the total amount incorrectly claimed plus a maximum penalty of 100% of the sum owed, effectively doubling the liability to HMRC.

Help from the experts
Moore Kingston Smith’s specialist tax dispute resolution team has been dealing with HMRC for over 20 years. Navigating correctly through the complex legislation is key, as is taking proactive steps before it is too late.

If you have any questions about furlough payments, please do not hesitate to contact us.