Government extends furlough fraud reporting window

27 July 2020

The exploitation of the government’s Coronavirus Job Retention Scheme (CJRS) has seen a rise in recent months, with instances of ‘furlough fraud’ being reported to HMRC. In recognition of this, the government has implemented a new proposal with the aim of helping claimants to report the overclaims themselves.

The scheme, introduced in March 2020, was established by the Chancellor, Rishi Sunak, in a bid to keep the UK paid in scenarios where job losses would have occurred due to the current COVID-19 pandemic. Unfortunately, however, reports have been made stating that employees have been forced to work whilst placed on furlough or have been informed that they are on furlough when they have received a reduced payslip.

HMRC has stated that it will be cracking down on these instances and has encouraged employees to make reports directly to them. HMRC has also recently stated that it will offer an amnesty to claimants who report the fraud themselves.  Previous legislation stated that a claimant has 30 days to inform HMRC that they have knowingly or mistakenly committed furlough fraud. An amendment to the Finance Bill has been issued extending this period to 90 days. Under this amendment, claimants will be given a 90-day window to admit their mistake and report the error directly to HMRC.

The amendment will also extend the powers that HMRC holds to check coronavirus-related grants made to claims and ensure that they have been used correctly. This means that the grant payments which have been made in relation to the furlough scheme have been applied to the pay of workers and will ensure that they have not been overpaid in any way.

The 90-day extension will also cover claims made under the Self-Employment Income Support Scheme (SEISS), the coronavirus Statutory Sick Pay rebate scheme, the coronavirus business support grant scheme, and any other COVID-19 grant schemes.

Claimants are reminded that, under the rules, any organisation caught deliberately using grant money for anything other than the original purpose it was intended, could face financial penalties. It has been reported that for every £1 claimed incorrectly, HMRC has the power to convert it into £1 of tax liability, meaning 100% claw back.


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