According to the FT Advisor, HMRC has said it will take a lenient view of those businesses which make genuine mistakes when submitting furlough claims. It appears to acknowledge that the rules are complicated and, has said, it is "not trying to catch [them] out". 

However, those businesses that deliberately claim for employees they haven't furloughed or for money they aren't entitled to receive, will be penalised. Enforcement measures are expected to be set out in Finance Bill 2020, which is currently going through the committee stage in parliament. 

The government has also started a short consultation on enforcement measures which will, if implemented, make directors liable for tax charges if they have deliberately flouted the rules. This states that HMRC will be given powers to recover payments "where a Coronavirus Job Retention Scheme payment has not been used to pay employees, make pensions contributions, pay PAYE or National Insurance contributions."

A spokesperson from HMRC told the FT "This provision would only be used in the most egregious cases, where amounts are deliberately over-claimed with the officer's knowledge, and where the company is insolvent or in serious risk of insolvency and there is a serious possibility it will not pay the tax liability".

However, HMRC could also take criminal action in cases of fraud.

By way of reminder, organisations must retain the the following records for six years:

  • the amount claimed and claim period for each employee
  • the claim reference number
  • their calculations

HMRC are encouraging anyone to tell them if they believe their employer is defrauding it under the furlough scheme via its online portal. At the end of May, it had received over 1,900 reports and, we expect that figure to increase, particularly if employees are made redundant once the furlough cash stops and have nothing to lose by reporting their former employers.

Our Coronavirus updates

We're working hard to keep you up to date with legal developments around Coronavirus. We've set up a portal which includes lots of helpful articles and advice to help you.

If you have a query, that we haven't answered, please contact us.