Furlough Warning – How HMRC could ‘clawback’ money from fraud


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Furlough Warning – How HMRC could ‘clawback’ money from fraud

FURLOUGH leave is something which millions have found themselves on in recent months, following the launch of the Coronavirus Job Retention Scheme. Now, a warning has been issued, as new laws are set to come into force this month.


This week, a warning for people who have used the furlough scheme has been issued.

The tax and advisory firm Blick Rothenberg has suggested HM Revenue and Customs (HMRC) could be set to “clawback” money from those who have made incorrect claims, WalesOnline reports.

Fiona Fernie, a tax dispute and resolution partner at the firm, said: “HMRC has started investigations into companies and individuals that it believes have fraudulently made claims under the Coronavirus Job Retention Scheme (CJRS), which has paid out more than 27billion [pounds].”

She continued: “The Government now intends to clawback as much money as possible from those whose claims were wrong.

“Nobody who has received these grants should be complacent, the proposals for clawback are not confined to instances where the claim was fraudulent – it applies to cases where there has been a lack of proper care as well.

“Now is the time to ensure that claims under the CJRS are accurate.”

Ms Fernie added: “The Government is proposing that the grants are taxable so that where the recipient should not have been entitled to the grant in the first place or has used the funds inappropriately, the full amount of the grant is subject to income tax at a rate of 100 percent.

The regime is retrospective – applying to all grants made under the scheme. Legislation has been drafted with a view to it being enacted as part of Finance Act 2020 which is expected to become law later this month (July 2020).”

Last week, a warning was issued on furlough fraud.

It came after almost 4,500 whistleblower complaints to HMRC were reported.

David Browne, Employment Law Partner at Shakespeare Martineau, spoke to Express.co.uk on the topic of the scheme, and the consequences of misusing the scheme.

He said: “While it is difficult to say whether rule changes to the furlough scheme will raise the instances of furlough fraud, the legislation prepared by the government has been prepared in record time.

There are gaps, issues and loopholes – which is why the scheme has been finessed as time goes by.

“Unfortunately I do think some unscrupulous employers are taking advantage of the scheme. One of the changes now is that employees can be brought back part time.

“I would hope this would stop instances of furlough fraud, and the sorts of fraud we have seen in the past.”

And, according to Mr Browne, HMRC is likely to get touch on those who are deemed to be exploiting the scheme

“In terms of fraud, it is being widely reported. HMRC will take this very seriously, and this is a potential criminal act. The scheme is costing the country huge sums of money,” he continued.

“You can be sure that when HMRC are processing claimants and even looking back at things over time, they will scrutinise this.

“I would like to think fraudsters are ultimately caught out on this, because it is one of those schemes that are not a bottomless pit.

“It will come to the point where the scheme ends in October, and because there is no bottomless pit, if there is anything that looks suspicious it is likely to be investigated, and serious consequences and repercussions will follow.”


Source: The Express