Given estimates suggesting £5.8 billion lost to error and fraud in Covid-19 support schemes, it’s not surprising HMRC is investing heavily in compliance. A Taxpayer Protection Taskforce of 1,265 staff is involved in post-payment enquiries, lasting at least until 2023.
The aim ultimately is to identify and recover amounts overpaid under support measures like the Coronavirus Job Retention and Eat Out to Help Out schemes. HMRC intends to produce updated error and fraud estimates for furlough claims by summer 2022, using a random enquiry programme, and analysing data from completed compliance activity.
Showcasing its detective work, HMRC cites the example of a business claiming to have furloughed all its workforce. But when HMRC examined debit and credit card sales for the period, it looked like business as usual: the figures didn’t suggest trade had been shut down and HMRC duly recovered £53,000 in furlough payments.
The Taskforce’s main focus is fraud, not innocent error. But where there is genuine error, HMRC wants to support businesses to put things right. To this end, it is issuing nudge letters to some businesses, asking them to revisit their claims.
Risk areas range from problems stemming from payroll software, to errors calculating pensions, salary sacrifice and National Insurance contributions. The position can be particularly complex where employees weren’t paid enough under furlough rules. Here, employers must either top up wages or repay furlough monies within a ‘reasonable period’ as set out in HMRC guidance. A high level of professional body discussions are ongoing with HMRC on a number of points, such as how to top up underpayments to employees, given tax and benefit implications, and whether there are any de minimis limits applying to errors found.
We strongly recommend that employers look back over claims now to check for potential errors. The Clayton & Brewill team is happy to provide further advice.