TaxJun 2 2020

HMRC to go after company directors for furlough fraud

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HMRC to go after company directors for furlough fraud
ByRachel Mortimer

HM Revenue & Customs has warned it will impose a penalty on directors who deliberately flout the rules of the government's coronavirus furlough scheme.   

In draft legislation published on its website the government outlined its plans to recover payments under the coronavirus support schemes, including the Self-Employment Income Support Scheme and the Coronavirus Job Retention Scheme, which the claimant was not entitled to. 

HMRC also warned it would be able to charge a penalty in cases of "deliberate non-compliance", including where partners in a firm were unaware another partner had made a claim under the schemes. 

The taxman said it would hold directors "jointly and severally" liable for a penalty on the assumption "each partner is taken to know anything that any of the other partners knows".

The proposal is intended to hold to account directors who fraudulently applied for furlough grants, but Tim Stovold, head of tax at Moore Kingston Smith, warned directors whose non-compliance with the furlough scheme was accidental could also fall within the rules. 

Mr Stovold said: "Although these rules apply to fraudulently claimed furlough grants, they will also apply where the company has not understood the complex rules of the scheme and claimed the grant in error.

"HMRC is paranoid about fraud but these powers could make a director liable to repay an amount they never benefitted personally from in the first place."

Last week the government extended its self-employed support scheme to offer a second grant in August and revealed it had already paid out £6.8bn on 2.3m claims.

Its furlough scheme is set to run until October with the latest figures showing 8.4m jobs have been furloughed since the crisis began.

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