Furlough Fraud is a problem that continues and will continue for many years to be an issue for Her Majesty's Revenue & Customs (HMRC). Most employers will receive, at a minimum, a review over the next few years, but many will be specifically targeted; a great deal of these will be as a result of employees reporting employers, once they have been made redundant. HMRC are already cracking down on unscrupulous employers and employees, even though the scheme will not end until 30th September. Random checks are being performed on companies, asking them to send over information relevant to a business and furloughing. If the information supplied gives cause for suspicion, they will follow up for more. It is easy for the government and HMRC to adopt the mindset of raking back as much of the money as possible paid in breach of the rules. When HMRC identify clear cases of furlough fraud, it is straightforward to get it back.
Whistleblowing organisations are encouraging employees to raise the issue internally first. It could be, for example:
In reality, incorrect claims could be errors or technical misunderstandings, such as volunteering, training, administrative duties, connected businesses, directors’ duties, calculation or clerical errors.
Claims will need to be repaid if the claim is based on dishonest or inaccurate information. The main penalties are:
HMRC have confirmed that they will not hesitate taking criminal action against the most serious cases.
Those who have received payments under CJRS should pre-empt any HMRC investigation and review their position as soon as possible. At Davidsons we can assist you to prepare for a potential HMRC audit by undertaking an internal review, which will include the following:
If you are in any way concerned about how claims for furlough payments and furlough fraud may affect you, whether you are a business or an employee, please contact a member of our specialist team as soon as possible. Proper management of HMRC is the best way of reducing the tax, interest and penalty as well as the time taken in resolving any tax dispute.
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