In recent weeks, HMRC have been making it clear that they will be auditing furlough claims where they believe there has been an inaccuracy, whether deliberate or not. They believe between 5-10% of claims made contain some form of error. It is likely that there will be a large number of furlough claims across the country which contain small errors and that is mainly to do with the complexity of the calculations and eligibility rules for this new process.
HMRC have stated that their main aim is to focus on claims that have been made fraudulently rather than those which contain small processing errors made in all innocence. Apparently they have identified 27,000 claims where something looks to be wrong and are initially going to check into 11,000 of those.
There has now been an issue of the first batch of HMRC’s compliance letters to employers which state that they believe something appears to be wrong either because it includes ineligible employees or too much has been claimed for some other reason. It gives no detail other than that. It does not even refer to specific claims.
What you need to do
The letter leaves no option other than to go back through each claim and check the individual details of claims submitted between April and August. This could involve a considerable amount of work.
It is not known what is triggering these letters for particular employers but it may be that they include employees who were not paid through the payroll in February or March 2020, but have subsequently appeared in a furlough claim. Not this could be for a number of legitimate reasons, such as those transferred from another employer under TUPE, those returning from parental leave and even those returning from military service. These occasions would not necessarily have been picked up by HMRC and would be a useful first issue to check.
Having carried out a review and confirmed that the claims were in order, the employer is asked to telephone HMRC, although there are likely to be delays on them answering. Once through they will be informed that an officer will be assigned to their case but it will be some weeks before they will be in a position to process any investigations.
Accident or deliberate?
If an employer discovers an error in their review, they are asked to contact HMRC by email. They will then provide instructions on how to make a formal disclosure, even though we are still in the window for making voluntary disclosures of errors.
Should an error result in penalties, these are set out in HMRC factsheet CC/FS48 on their website.
If we have been registered as agent then we should receive a copy of this initial letter, but often some slip through the net, so we would advise to make us aware as soon as possible. We will then be able to consider the best approach as HMRC may be acting on incorrect information and a full review could be avoided.
September 22nd, 2020