HMRC Investigating COVID-19 Support


Last week there was a fair bit in the press about blatant furlough fraud, where the BBC Radio Four’s documentary programme ‘File on 4’ exposed three rogue employers that exploited the Government’s furlough scheme during the pandemic. These employers were cited as using threatening techniques to suppress any whistle-blowers to HMRC, telling workers that they were 100% still at work and that the company would be daft not to take the money.

Whilst these cases are extremes, HMRC has reportedly received 30,000 calls to its fraud hotline; and it is estimated that COVID-19 has cost HM Treasury £6billion in fraud.

The ‘File on 4’ programme was aired on the same day that HMRC released updated guidance on taxation of COVID-19 support payments, which enables HMRC to give joint and several liability notices to directors, shadow directors and certain other individuals connected to a company, making those individuals liable for amounts the company owes to HMRC.  The guidance sets out that it does not matter who pays or how much each individual pays as long as the amount owed is paid in full.

We fully expect HMRC to ramp up their investigations of potential fraud in relation to COVID-19 support mechanisms, including furlough, self-employment income support scheme, and the use of Government backed bank loans, for instance where they have been used as Directors’ income rather than keeping the business operational.

Should HMRC launch an investigation in relation to the Government support you have received during the COVID-19 pandemic, please contact Jackie or Andrew.

Castletons Accountants

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