Coronavirus Job Retention Scheme fraud | CJRS investigation

Suspected furlough fraud claims

HMRC’s Chief Executive, Jim Harra, revealed that HMRC has assumed ‘for the purposes of planning’, that between 5% and 10% of the sums it has paid out were based on erroneous or fraudulent claims. The ‘planning’ Mr Harra was referring to involved not only recovering up to £3.5bn of overpayments but also punishing those responsible for deliberately submitting fraudulent claims.

It has been announced that HMRC is looking into 27,000 ‘high-risk’ claims, and a number of people, including an accountant, have already been arrested in association with fraudulent furlough claims. With Downing Street confirming that the UK will be doing “everything possible” to recover any money that was incorrectly claimed, it seems highly likely that HMRC will dedicate a great deal of resource to tackling any abuse of the various COVID-19 support schemes.

Check, disclose, pay-back

It is encouraging that HMRC has already acknowledged that not every incorrect claim will have been made with the intention of defrauding. However, HMRC has confirmed that irrespective of whether overpayment claims were made innocently or deliberately, it will be seeking to recover any sums that should not have been paid. In addition, if an employer over-claimed a CJRS grant but hasn’t yet repaid it, they should notify HMRC by the latest of the following notification period dates:

• 90 days after the employer receives the CJRS grant to which it is not entitled
• 90 days after the day circumstances changed so that the employer was no longer entitled to keep the CJRS grant
• 20 October 2020

Penalty

If HMRC has not received notification of the overpayment by the relevant date and considers you knew you were not entitled to your grant, HMRC will treat this as deliberate and concealed behaviour. HMRC will be entitled to charge a penalty of up to 100% of the overpayment that the employer received and could publish your details as a deliberate defaulter.

HMRC will take account of your knowledge at the time of the offence when adjudicating the level of penalty, but unlike with existing inaccuracy penalties, HMRC has no legislative power to offer penalty suspension. Consequently, even entirely innocent errors could potentially result in employers being detrimentally affected if the position is not rectified and robust representations are not made regarding your knowledge of any over claim. 

Employers really ought to be testing the accuracy of their claims and making disclosures where appropriate. The importance of framing your disclosure correctly cannot be stressed enough. In cases where HMRC does not accept that the disclosure is complete, it may still charge financial penalties, and even consider criminal prosecution if it determines that the disclosure was knowingly submitted inaccurately.  

How we can help

Buzzacott’s award-winning Tax Investigations and Dispute Resolution team have built a reputation for making expert disclosures on behalf of clients. Our expert knowledge of HMRC’s policy and procedures means that our clients regularly avoid unnecessary penalties. For a free and entirely confidential discussion regarding how we can help you correct any inaccuracies in your CJRS claims, please do not hesitate to give us a call on +44 (0)20 7710 3389.

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