Two further arrests have been made in connection with fraud relating to the CJRS for the sum of £70,000. An accountant from Romford and a Company Director from Walthamstow have both been arrested on suspicion of fraud by false representation and money laundering.
Both individuals have since been released under investigation, but devices and business records have been retained by police.
This is not the first arrest made in connection with suspected fraud, back in July arrests were made in the west midlands in relation to suspected fraud.
HMRC have already started writing letters to over 3,000 businesses per week, who are believed to have made claims for too much money through the scheme. This is based on information that HMRC has access to on those businesses.
Terry Braithwaite, Assistant Director at HMRC’s Fraud Investigation Service commented on the scheme.
He said: “The CJRS is part of the collective national effort to protect jobs. While most employers have used the scheme responsibly, this is taxpayers’ money and HMRC will not hesitate to act on reports of abuse of the scheme.”
What is classed as furlough fraud?
The Government explained that the following actions constitute an over claim of the grant and could lead to furlough fraud:
- Any amount the employer was not entitled to receive.
- any amount the employer is no longer entitled to receive after a change in circumstances, eg an employee whose monthly wages are being claimed for under the scheme is no longer employed by the employer.
The Government has introduced legislation to aid in the recovery of overpaid monies. HMRC’s concern is to address non-compliance with the scheme but are not obliged to look into “innocent errors” in their approach to tackling this issue. However, employers will not be charged a penalty if they did not know of the overpayment at the time it was received, or at the time that their circumstances changed, and if it is repaid within the following time period:
- Companies will have until 12 months from when their accounting period ends to rectify errors
- Sole traders or partners will have until 31 January 2022.
While errors can be rectified, failure to report this can incur such penalties as:
- Income tax charge — full overclaimed amounts may be recovered if HMRC make a tax assessment for the amount overclaimed, of which payment of the assessed amount will be due 30 days after the assessment (otherwise interest will be charged on the tax from day 31)
- Company officers can be made personally liable to pay the tax charged on overclaimed grants in the case of insolvency — if officers of the employer knew of the overclaimed grant, or tax incurred on the grant, but this cannot be recovered from the company
- 100% penalty for failing to notify HMRC, within the below notification period, that the employer is chargeable for income tax on an overclaimed furlough grant
- Details of employers that deliberately overclaim may be published
- Partners will be jointly and severely liable for any overclaimed grants repayable.
If employers repay monies overclaimed, this will prevent any potential tax liability relating to the overpayment of the grant. Notification of any overclaimed furlough grant payments need to be made within any of the following notification periods:
- 90 days after receiving the overclaimed payment
- 90 days after the day circumstances changed
There is no time like the present to ensure your payroll provider is 100% compliant with HMRC and have established compliance accreditations such as Professional Passport and CIPP (PAS) both of which we currently hold. If you would like to find out more about our compliant processes please contact us today!
Tel: 01252 863700 web: www.epayme.co.uk email: info@epayme.co.uk