Our senior solicitor, Rafia Ahmad, explores these claims in closer detail.
In the news recently, there was a report that £215m has been returned to HMRC by employers for furlough payments that were incorrectly received, or if an employer had decided they did not require the payment. This is just a small part of the overall £35.4 billion that has been claimed, but the Chancellor will no doubt be pleased to see it returned.
If HMRC does become aware of fraudulent claims, however, it has indicated it would be quick to take action. It seems likely that audits will begin to take place some time after the scheme ends at the end of October 2020. HMRC recently told MPs on the Public Accounts Committee it estimates that 5-10% of furlough cash has been wrongly awarded.
The Finance Act 2020 – which was enacted recently – allows incorrectly claimed furlough payments to be recovered as tax through the tax system, subject to HMRC's usual administration, collection and enforcement powers.
If an employer has over-claimed a grant and has not repaid it, they must notify HMRC by the latest of either:
If the employer does not do this, they may have to pay a penalty.
HMRC has stated it will carry out criminal investigations – where fraud is suspected – and has already instigated arrests. Any form of criminal investigation, of course, could have severe ramifications on businesses albeit it seems likely that such action would only be taken in extreme, or serious, cases.
With the scheme ending shortly, it is important now more than ever to ensure payments are being claimed correctly.
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