Coronavirus Support: Have You Advertently Been Fraudulent?

The Government have offered a huge amount of support to businesses during the Coronavirus outbreak. From furlough, through bounceback loans to income support, you can't really fault them for their help. But it has opened these schemes up to fraud ...

Starting off with the Coronavirus Job Retention Scheme (CJRS), or Furlough Scheme, I have recently written about it winding down. It has obviously been widely used and it is estimated that since launch, 1.2m employers have used it to furlough 9.6m jobs.

With nearly a 1/3 of the UK employees furloughed, HMRC have been worried about employers abusing it and undertaking fraud, so a reporting hotline was formed. It is noted that 8,000 people have phoned this hotline to report employers abusing the scheme and arrests have already been made.

HMRC will no doubt be investigating all those employers reported and then will move onto random compliance checks over the next five years or so. There are likely to be two main areas of abuse:

- An employer claiming furlough money, but not using it to pay the employee's wages
- Asking employees to work whilst claiming money for them

The latter may seem obvious, but what about a furloughed employee looking to impress with time on their hands who:

- Wrote a work email
- Took a call from a client or supplier
- Or posted something on social media that promoted the business

If they were furloughed from their job, they should have done none of these things and therefore any sort of business activity by them could indicate a breach of the terms of the CJRS scheme.

"Over £30 billion has been lent using Bouce Back Loans!"

The Government has an inkling that not all BBLs have been used to support business cash flow purposes. They were certainly not meant for people to buy a hot tub for their garden during lockdown.

In order to be entitled to a Bounce Back Loan, a business must have been trading. As a reminder the loans range from £2,000 up to 25% of a business' turnover, with the maximum loan amount being £50,000.

"The Self Employed Income Support Scheme has issued over £8 billion in grants!"

This scheme was introduced to help the self employed who were "adversely affected by COVID 19" and grants totalling over £8 billion have been made by the Government.

There will obviously be a lot of discussion about the definition of 'adversely', but if a grant has been claimed when a business has been thriving HMRC will be take a dim view and they'll soon be taking action.

"HMRC will take action!"

New fast tracked legislation is giving HMRC the power to issue harsh penalties for misdemeanours so now is the time for businesses and employers to check they were compliant, correct any errors, and if need be, seek clarification from HMRC.

If you feel inspired to find out more about anything I've said here, do call me on 01908 774320 or leave a comment below and I'll be in touch as soon as I can.