To help employers deal with the economic impact of the coronavirus, the government has put in place a range of financial schemes for affected businesses.
One of these schemes is the Coronavirus Job Retention Scheme (CJRS), which is designed to provide financial assistance to businesses that need to place members of their staff on furlough or flexible furlough during the pandemic.
If you have made use of the Coronavirus Job Retention Scheme, your business may be subject to attention from HMRC as they review the CJRS to detect fraudulent use of the scheme.
Below, we’ve explained what you can do if your business is subject to a CJRS investigation (or furlough investigation). We’ve also provided more information about how the scheme works for UK businesses.
What is the Coronavirus Job Retention Scheme (CJRS)?
The Coronavirus Job Retention Scheme, or CJRS, is a scheme provided by the government to provide assistance to companies that have been negatively affected by the Covid-19 pandemic and need to place employees on furlough.
Furloughing an employee means granting the employee a temporary leave of absence from the workplace, with an intention to return to their job when possible.
Businesses that are eligible for the scheme can claim for up to 80 per cent of their employees’ wages, as well as National Insurance and pension contributions, allowing them to reduce the financial impact of the national response to the pandemic.
As with other schemes aimed at assisting businesses during the crisis, not all businesses are eligible for the Coronavirus Job Retention Scheme (CJRS). In order to be eligible for financial assistance, businesses need to meet specific criteria provided by the government.
During the furlough period, certain restrictions are placed on employees, limiting their ability to perform work that generates revenue or provides services. More information about this can be found here.
Furlough payments to employees have recently been extended, meaning that the government will continue to assist eligible employers until the end of November. The government estimates that the scheme will involve more than £70 million in furlough-related financial assistance.
Furlough Investigations: What You Need to Know
Due to the immense costs of the Coronavirus Job Retention Scheme and the need for money to be used efficiently and legally, HMRC has stated that it intends to monitor and police use of the Coronavirus Job Retention Scheme to prevent fraud and abuse.
HMRC has publicly announced thousands of separate investigations into potential misuse of the scheme by UK-based employers.
If your business has received funds through the Coronavirus Job Retention Scheme, it could be subject to attention from HMRC. If HMRC detects fraud or misuse of funds, your business could face the following penalties:
- Repaying the amounts paid through the scheme, along with interest
- Significant fines, particularly for instances of deliberate fraud or misuse
- Additional investigations into employers’ and business owners’ taxes
If Your Business is Receiving Attention From HMRC
If your business has received communications from HMRC indicating that an enquiry is taking place, it’s important to seek expert advice. HMRC can take aggressive action to recover funds and impose penalties on your business.
An investigation from HMRC may expand to look at your business’s VAT, PAYE and other tax payments, causing a significant degree of inconvenience for your business.
As specialists in business finance and recovery, we can help you if your business is subject to an investigation by HMRC.
Our team can assist with cases including accidental misuse of the scheme, normal use of the scheme that HMRC has wrongly viewed as misuse, as well as investigations that expand into other areas of your business’s tax affairs.