HMRC begins compliance activity around furlough mistakes
27 August 2020
The Government’s Coronavirus Job Retention Scheme (CJRS) is drawing to a close and will finish on 31 October 2020. Read our full CJRS guidance for further information.
HMRC has wasted no time formally starting its compliance activity challenging businesses on their CJRS claims. This follows last month’s Royal Assent of the Finance Act, which includes legislation empowering HMRC to tax & clawback COVID-19 support payments under the furlough (CJRS), SEISS & other schemes.
HMRC continues to receive tip offs about incorrect claims – almost 8,000 at the last count, as reported recently by i News.
HMRC can use its powers to undertake criminal investigations with a view to prosecution - one person was arrested for alleged furlough fraud last month. However, we mostly expect HMRC to use its civil powers.
Read our previous article where we discuss how employers should check calculations thoroughly, and how BDO could assist.
HMRC is now writing to employers about their furlough claims in advance of the 90 day deadline to notify or repay excessive claims. The recent update from the ICAEW discusses HMRC activity and asserts that this week they have already contacted over 3,000 employers.
These letters are sent following HMRC’s risk assessment process. This is likely to be the first of several batches. Whilst HMRC is currently encouraging employers to meet the 90-day deadline, we expect HMRC to subsequently focus on cases where it can charge significant failure to notify penalties on employers who either knew they were making incorrect claims or who retained the furlough money despite not being entitled to do so.