Now is the time to check your furlough claims!
When the government announced the COVID 19 Job Retention Scheme back in March 2020, it was a speedy reaction to the events that were unfolding in front of us. Due to the pace of turnaround, it was clear there would be some challenges processing claims efficiently and that there would be some honest mistakes by those making a claim under the scheme.
HMRC has estimates that 5-10% of claims made under the scheme have been wrongly awarded. As this could be up to 3.5 billion, it comes as no surprise that HMRC are going to be allocating a lot of resources to try and rectify this situation!
If you are worried about any parts of your claim, then now is probably the time to seek some professional advice!
The following article from HR Magazine gives an interesting overview of the current situation.
“The Coronavirus Job Retention Scheme (CJRS) and the Self-Employment Income Support Scheme (SEISS) were programmes introduced by HMRC at remarkable speed to help individuals and businesses impacted by COVID-19. Inevitably when claims are made in a rush and under huge pressure, mistakes occur. Also, sadly, when a recession hits the likelihood of fraud tends to increase.
HMRC is gearing up to tackle incorrect and fraudulent claims for COVID-19 support payments. Last week HMRC’s permanent secretary Jim Harra estimated that 5-10% of furlough cash has been wrongly awarded, which equates to up to £3.5bn. This explains why significant HMRC resources are expected to focus on reviewing and correcting claims made. Even companies with large HR departments are expected to have made errors, due in no small part to the often complex calculations and definitions of what constitutes ‘wages.’
What is ‘furlough fraud’?
In the past HMRC has shown a zero tolerance to fraudulent behaviour. But what are examples of ‘furlough fraud’? A fraudulent error may involve employers claiming despite not meeting the scheme’s criteria, e.g. claiming CJRS despite keeping staff working, false payroll records, intentionally not using the CJRS money as required or claims by organised criminals.
Other types of errors which may be innocent are transposition mistakes in data, an error in a date or computation when inputting the claims online. The rules are complex, particularly for partial furlough, National Insurance Contributions and salary sacrifice.
As well as following up whistleblower reports, we expect HMRC to use its ‘Connect’ computer system to flag anomalies in claims, while looking at industry and sector norms.
HMRC’s Fraud Investigation Service can conduct criminal investigations with a view to prosecution for cheating the public revenue or fraudulent evasion of income tax. In deciding whether to do so it would consider HMRC’s Criminal Investigation Policy.
HMRC has already shown that it will act decisively, following an arrest for suspected furlough fraud in July 2020, on Friday it was announced that two further people have been arrested over a suspected £70,000 CJRS fraud. We expect civil tax investigations using the Code of Practice 9 or Contractual Disclosure Facility process.
On 22 July 2020, legislation was enacted giving employers 90 days to disclose incorrect furlough claims. This period ends in just six weeks on 20 October 2020, and gives businesses a vital window to right any wrongs. HMRC also has a process enabling claimants to repay incorrect claims.”