HM Revenue & Customs  

HMRC pledges leniency for furlough 'mistakes'

HMRC pledges leniency for furlough 'mistakes'

The taxman has insisted it is "not trying to catch out" directors who claim against the government's furlough scheme and promised leniency to those who make genuine mistakes with their applications.  

In draft legislation published last month HM Revenue & Customs warned it would impose a penalty on directors who deliberately flouted the rules of the government's Coronavirus Job Retention Scheme.

The rules mean the taxman 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. 

But HMRC has since told FTAdviser it would only use these powers in the most serious of instances and it intended to help rectify any cases where a "genuine mistake" had been made. 

An HMRC spokesperson said: "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."

At the end of May the taxman had already received almost 1,900 reports from the public of alleged furlough fraud, with HMRC promising to take criminal action in the most serious cases. 

The Coronavirus Job Retention Scheme is set to run until October, after it was extended by chancellor Rishi Sunak in May, but employers will soon have to start sharing the responsibility of paying furloughed employee's salaries.

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."

A number of people have contacted FTAdviser with concerns their own bosses, or those of family members, were fraudulently claiming under the scheme. 

In many cases employers were allegedly claiming on the scheme whilst asking their employees to continue working, and in some cases still only paying the 80 per cent salary contribution arranged by the government.

The spokesperson added: "We’re not trying to catch people out – if it turns out to be a genuine mistake then we’ll help put it right, and if it’s more serious then we’ll step in.

"These reports are just one way that HMRC identifies fraud. Claims are checked and payments may be withheld or need to be repaid if the claim is based on dishonest or inaccurate information. We won’t hesitate to take criminal action against the most serious cases."