Mark Brown: HMRC targets COVID fraud firms
Mark Brown, partner at Aberdeen chartered accountancy practice Meston Reid & Co, has warned businesses who have accessed schemes such as furlough and the Self-Employment Income Support Scheme (SEISS) to prepare for additional checks on their practices.
HMRC is getting serious about pursuing fraudulent claims for support associated with the Covid-19 pandemic – and businesses should get ready to show they’ve done things by the book.
The UK government has already made clear its resolve to tackle abuses: it is investing over £100 million in a taxpayer protection taskforce to combat an estimated £3.5 billion of fraudulent claims to date linked to Covid-19 support packages.
HMRC’s fraud telephone hotline has already received over 8,000 calls and it is looking into 27,000 ‘high-risk’ cases where it believes a significant error has been made.
HMRC is making it abundantly clear that it is taking this issue extremely seriously. Its prime focus will be upon significant cases, and organised crime in particular, but it has the leeway to explore the circumstances of any company or individual that has applied for support.
It’s of course important to stress that businesses which have done things correctly have nothing to worry about, but it’s still feasible that honest mistakes have been made. That’s why it would be prudent to plan ahead and be ready should HMRC come calling.
It’s key for companies to be carefully documenting their processes so they have a record to present as evidence of their decision-making throughout: minutes of meetings when the furlough status of individual members of staff is considered, for example.
For those that claimed SEISS, when it’s clear their business had not been adversely affected, there will be a need to pay the grant back.
With good systems and robust information readily available, businesses will be well placed to demonstrate the validity of their approach and avoid any time-consuming investigations.
For organisations that have committed wilful furlough fraud, the penalties range from fines, imprisonment, compensation and confiscation orders to director disqualification and serious crime prevention orders.
HMRC is going after this issue with real determination, and that should be welcomed by the taxpayer who wants those who commit deliberate fraud to be held fully to account.