CJRS fraud

Following the introduction of the Coronavirus Job Retention Scheme (CJRS) to address the employment concerns during the global crisis, there have been reports that it may not have always been used in the way it should be.

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:

  • 90 days after the date the employer received the grant it was not entitled to
  • 90 days after the date the employer received the grant that it was no longer entitled to keep because circumstances changed
  • Or by the deadline of 20 October 2020.

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.

For more guidance regarding CJRS, visit our Q&A here.

 


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Author: Rafia Ahmad

Senior Solicitor, ESP Law Ltd

Rafia trained and qualified with Wedlake Bell LLP, a London City law firm where she was an employment solicitor for six years before moving to the fast paced trading floor of Cantor Fitzgerald LLP, a London based New York prime brokerage/investment bank as in-house employment counsel. Prior to joining ESP, Rafia was a senior employment solicitor for five years with Backhouse Jones, the UK’s number one national road transport law firm. She advises on all employment matters both contentious and non-contentious including tribunal proceedings.

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