At present, 25 per cent of the UK workforce is being supported by the Government’s Coronavirus Job Retention Scheme (JRS) at a cost of around £20 billion. Adding to this, approximately 2.6 million people are enrolled on the Self-Employment Income Support Scheme (SEISS) at a cost of £7.5 billion.
While the core features of the schemes, originally announced in May, remain the same, recent changes have created a minefield for employers, increasing their chances of accidentally committing what is being termed ‘furlough fraud’.
Furloughed employees are not permitted to work for their employer while on furlough leave. They are however permitted to work elsewhere with a separate employer if they wish to do so. A number of factors have left the JRS open to abuse, with HMRC confirming that they have received over 3,800 reports of fraudulent claims since April.
In order to crack down on abuse, legislation to tackle furlough fraud is being fast tracked through parliament and could be passed as early as this month.
According to the draft bill, which is part of the Finance Bill 2020, if employers think they may have accidentally misused the scheme they could be given a 30-day amnesty to admit their mistake or risk facing a financial penalty, starting at 100 per cent of the sums incorrectly claimed.
The proposed bill would allow HMRC to use income tax assessments to reclaim any furlough money overpaid to employers or not spent on wages as intended. The bill would also give HMRC the same powers when it comes to misuse of the SEISS.
Michelle Sloane, Partner at RPC, explains: “The timeframe in which to self-report to HMRC in order to avoid significant penalties or a criminal investigation is short. There will also be substantial reputational damage for businesses that are found to have falsely claimed under the furlough scheme or the SEISS. It is therefore critical that all businesses, many of whom may have implemented claims in haste when the scheme was first introduced, take the time now, before the proposed legislation is enacted, to carefully review any claims they have made under the furlough scheme and/or the SEISS to ensure they have acted in compliance with all the rules and can evidence this with a clear audit trail, should HMRC come knocking.”
For further information about the Government measures to protect individuals and businesses, visit our COVID-19: Support for UK businesses hub.