Employers that believe they may have abused the Coronavirus Job Retention Scheme [CJRS] will have a 30-day period to admit their mistakes under plans being fast-tracked through Parliament. HMRC is preparing to tackle fraudulent and erroneous claims made to the CJRS and the Self-Employment Income Support Scheme (SEISS) but first wants claimants to confess to any misuse by providing a 30-day window of opportunity.
Draft legislation is being rushed through Parliament and is expected to become law in early July as part of the Finance Bill 2020. A consultation period has just been completed. The legislation will provide HMRC with the power to recover fraudulently claimed CJRS payments to employers, impose penalties, up to a maximum of 100% and pursue company office holders where businesses become insolvent, with joint and several liability.
It is clear that HMRC is now ramping up to tackle incorrect and fraudulent claims for Covid-19 support payments. Latest government statistics show the eye-watering amounts of money paid out and why HMRC resources will focus on this potential new area of fraud. Almost £20bn was paid out to more than one million employers in furlough claims as at early June and a further £7.5bn has been paid to 2.6 million SEISS claimants in the same period.
WLH Tax is aware from HMRC sources that it is very concerned at the number of belated tax returns and amended tax returns that were filed before 23 April, which appear to show significant increases in net profits from previous years and those reported on the original tax returns. HMRC believes that many of these claims could be fraudulent. Accordingly, HMRC inspectors have already identified those tax returns or amendments they consider could be fraudulent in readiness of launching enquiries.
The legislation is expected to introduce a 30-day window of opportunity to ‘confess’ and notify HMRC of any mistakes. After this it will be open season for HMRC to pursue incorrect claimants using both criminal and civil powers. For business owners, many of whom may have implemented claims in a rush at the start of lockdown, now is the time to check and double-check the amounts are right. Making sure the paperwork is accurate and government guidelines are adhered to is paramount
As of 20 June, HMRC had received over 3,000 reports of fraud relating to CJRS.
How can WLH Tax help
If you have concerns regarding a claim you have made for Covid-19 assistance via CJRS/SEISS, please contact us today for a free and confidential discussion.