How to get Covid-19 self-employed support scheme claims right

Where is the line drawn on how much information is provided, or access given to key personnel?

One common problem arises when HMRC is either given unlimited access to personnel or given leave to speak to people who may not know how the claims were prepared or who at most have limited knowledge - and they then provide the HMRC officer with the wrong information. 

It is better to have a single point of contact and a single line of communication with the officer. If it is necessary to speak to other more junior team members, managers should arrange to sit with them to avoid any confusion.

Third, where a mistake in claiming is identified by a business it is better to make this clear at an early stage.

This open approach will demonstrate that the business has attempted to take proper care, but that it is simply unavoidable that mistakes will be made.

It is perhaps inevitable that in view of widespread public concern at reported fraudulent claims, HMRC will leave no stone unturned in its search for impropriety or false claims. 

Extended powers

Remember, HMRC can enforce draconian penalties for errors; minimising the risk that HMRC considers these to be deliberate or that the business knew the claim was wrong but did nothing about it, is key.

The new legislation makes it clear that businesses have 90-days from receiving the payment, or when the business ceased to be entitled to the payment, to rectify the error and repay the money. 

Businesses should assume that HMRC will expect officers to pursue the maximum tax-geared penalty where it is found that incorrect claims were knowingly made.

While any extenuating circumstances should be considered by the officer, there is likely to be little sympathy for businesses which failed to behave properly.  

The new legislation extends HMRC’s powers to target partners and directors where fraudulent claims have been made.

Partners can be held jointly and severally liable for partnership liabilities. In the case of company liabilities too, under certain circumstances, directors may be issued with a personal liability notice so that they are individually liable for the amount owed to HMRC.

There is also the risk, in the most egregious cases, that HMRC may consider a criminal investigation with a view to prosecution. 

While this process sets the standard of proof significantly higher, HMRC will have few qualms in referring cases to the Fraud Investigation Service of HMRC, where appropriate. 

Fourth, it should be remembered that HMRC expects businesses to retain records for six years.