On 23rd March 2020, the government announced a radical new scheme to help protect millions of employees who were suddenly at risk of redundancy due to the coronavirus pandemic. The scheme helped to save jobs, peaking at over 8.9 million people on the scheme in May 2020.
The scheme was a lifesaver (or rather job-saver) for millions of people, however, there are always a few who decide to try and bend the rules.
That’s why HMRC are interested in looking into abuse of the furlough scheme in order to reclaim wrongfully paid money. Some examples of how companies took advantage of the scheme include:
- Employers placing their staff on furlough (with or without their knowledge) and claiming on the scheme whilst staff continue to work as normal.
- Employers asking their employees to take a 20% pay cut whilst placing them on the scheme and allowing them to continue work as usual.
- Companies asking employees to work as volunteers for the business whilst still claiming furlough payments.
In order to encourage firms to confess to furlough fraud, the government announced a 90-day confession window in June 2020. The window means that, for 90 days after a claim is submitted, the claimant can confess to any mistakes to HMRC without fear of further penalties. Claimants can also solve the issue by repaying any expenses that they should not have claimed.
HMRC know that, due to the rushed set up of the furlough scheme, there are several opportunities to exploit it and want to encourage people to come forward and repay money that they are not entitled to.
So, what happens if you decide not to confess? Well, it is safe to assume that due to the generous confession window, HMRC will see you as Fair Game. They are likely to take a ‘Gloves Off’ approach in investigating your claims and pile on the penalties for not admitting it. HMRC have also said that they will show leniency where a ‘genuine mistake’ has been made and that the latest, most powerful rules will only be used in cases where amounts have been deliberately overclaimed.