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.
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An HMRC spokesperson said: "The Coronavirus Job Retention Scheme is part of the collective national effort to protect jobs. This is taxpayer’s money and fraudulent claims limit our ability to support people and deprive public services of essential funding. "We’d ask anyone concerned their employer might be abusing the scheme to please contact us. "It could be that you’re not being paid what you’re entitled to, they might be asking you to work while you’re on furlough, or they may have claimed for times when you were working."