What you need to know

People will complete applications in a rush and not accurately assess or answer all of the questions leading to overpayments or payments they might not otherwise be entitled to.
And shocking as it may seem, some dishonest people will deliberately set out to defraud the system by claiming funds they aren’t supposed to get, or asking workers to continue in their posts while taking furlough payments that are meant to go to them in the meantime.
We’ve previously written that HMRC were beginning to investigate and act on cases of overpayment and outright fraud but new figures released show that they’ve decided that there’s no more Mr Nice Guy and woe betide any businesses that have tried to take advantage of the situation.
HMRC Permanent Secretary Jim Harra told the House of Commons Public Affairs Committee that £3.5 billion or 5-10% of the Coronavirus Job Retention Scheme (CJRS) budget had been wrongly allocated.
This was in addition to a total of £30 billion lost in 2019 to taxpayer error and fraud.
Harra said: “We made an assumption for the purposes of our planning that the error and fraud rate of the scheme could be between 5% and 10%.
“What we have said in our risk assessment is we are not going to set out to try to find employers who have made legitimate mistakes in compiling their claims, because this is obviously something new that everybody had to get to grips with in a very difficult time.
“Although we will expect employers to check their claims and repay any excess amount, what we will be focusing on is tackling abuse and fraud.”
HMRC’s own fraud telephone hotline set up to allow employees to report concerns of potential fraud has received over 8,000 calls. They confirmed that they are looking into 27,000 “high risk” cases where they believe a serious error has been made in the amount an employer has claimed.
The three main reported types of furlough fraud included asking employees to work while they’ve been furloughed; claiming furlough pay for when they were actually working and companies not paying workers what they’re legally entitled to.
Harra reiterated: “While we can’t get involved in any relationship between the employee and employer, we can certainly reclaim any grant that the employer is not entitled to, which includes grants that have not passed on in wages to their employees.”

What will HMRC do next?

Of particular focus, HMRC have confirmed that anyone who has failed to pay across the PAYE element of the furlough grant, will be deemed to have misused the scheme and will be required to repay the full balance of furlough grants received.
With the end of CJRS in sight and HMRC flexing their muscles we are definitely into the next phase of the Covid-19 story.
While innocent mistakes and errors will be treated with an element of understanding, HMRC will be looking to make examples out of fraudulent applications and payments and will be in no mood to hear any mitigation if they find them.
If you think you owe HMRC or might have accidentally contravened the rules of CJRS then get in touch with us as soon as you can. 
We have worked with hundreds of businesses who have had HMRC issues so have the experience and knowledge to help you present the best case to avoid an unnecessarily harsh punishment in an environment when HMRC is looking to dish them out.