It has been reported that as many 34% of employers have asked their furloughed employees to carry out some form of work, administrative task or even cover another employee’s work, whilst on furlough. This is against government guidance and new proposed revisions to the Finance Bill 2020 aim to give further powers to HMRC in order to mitigate this sort of furlough related fraud. These new powers, a direct response to claims that HMRC has been inundated with reports of employers abusing the furlough scheme and claiming when they are not entitled to do so, would give HMRC the power to:
- use its information and inspection powers to check a furlough claim has not been overpaid and that a furlough payment has been used to pay furloughed employee costs;
- raise an Income Tax assessment on anyone who has received a furlough payment to which they are not entitled, or anyone who has not used a furlough payment to pay furloughed employee costs.
- charge a penalty where a person deliberately makes an incorrect claim for a furlough payment. It also gives HMRC powers to charge a penalty where a person who has claimed a furlough payment deliberately does not use it for the costs it was intended to reimburse.
- to make a company officer jointly and severally liable for the Income Tax charge raised in relation to any furlough payment to which the company was not entitled or any furlough payment which was never intended to be used to pay furloughed employee costs in certain circumstances.
Furthermore, a recent YouGov survey of more than 500 business leaders has found that 51% will have to make lay-offs within three months when the furlough scheme comes to an end. This includes 21% who say they would have to let at least three in ten of their workers go. Only 34% of those surveyed say they would be in a position to retain their entire workforce.
Our podcast on this update can be found here [HMRC’s Proposed New Powers]
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