Coronavirus Job Retention Scheme Fraud

Without a doubt, many employers made use of these claims which were deemed legitimate. However, HMRC have reported over 27,000 high risk claims were made, with enquiries sent to 10,000 of these.

Examples of such wrongful claims include:

• Claiming furlough payments for staff who continue to work normally;
• Furloughing staff but asking them work “voluntarily” on an unpaid basis;
• Claiming furlough payments for “ghost” employees, and/or employees who left employment before 19th March 2020;
• Not paying furloughed staff the full amount that they are entitled to under the CRJS; or
• Failing to account for PAYE tax and NIC in relation to genuine furlough payments to staff.

Employers who have incorrectly claimed CJRS based on dishonest or inaccurate information can face penalties, or even criminal action in the worst cases. The civil penalties are up to 100% of the claimed amounts that have not been used for employees’ costs.

Claimants are also required to notify HMRC within 90 days of their non-entitlement to the furlough receipts and there is a separate penalty for failure to notify that liability. Having given HMRC stronger powers than normal, the recovery and enforcement legislation also allows HMRC to transfer CJRS penalties to the directors of a company if it is insolvent, or at a risk of insolvency, and where the employer does not or cannot pay them.

HMRC “nudge” letters have been sent to many employers to encourage them to review their claims and this is a sign that HMRC believes that there may be inaccuracies in those claims. A nudge letter is designed to prompt the individual regarding any income HMRC believe they receive but aren’t claiming.

If you feel as though you have wrongfully received a letter and require assistance, please get in touch.