HMRC announces 90-day amnesty for furlough abuse

HMRC has announced the introduction of a 90-day amnesty for businesses that it suspects of abusing the furlough scheme, reports accountants, business and financial advisers Kreston Reeves.

The amnesty is introduced in the Finance Act 2020 which received Royal Assent on 22 July. HMRC has already started investigating businesses that it believes have deliberately or inadvertently allowed staff to work whilst on furlough.

Andy Wallis, a Partner in the Corporate Tax team at Kreston Reeves comments.

“The Coronavirus Job Retention Scheme has been a lifeline for many businesses, yet there is increasing evidence that it is being abused, for example, by employers asking staff to work whilst on furlough. Whilst it is clear that this is wrong, businesses may easily find that they have inadvertently breached the rules as little guidance was available when the first claims were being submitted.

“HMRC has a duty to investigate where it believes fraudulent activity is happening, so it is not surprising that investigations are already underway.

“The Finance Act introduces a 90-day amnesty that puts the onus on businesses to notify HMRC of any overclaim. Businesses that do not notify will be treated as deliberately concealing overpayments from HMRC and can attract penalties of up to 100% of the amount overclaimed.

“HMRC is sending a clear message to businesses – take advantage of this amnesty or face investigation. It is clear that HMRC hopes its amnesty will raise significant revenues.

“It is vitally important that businesses keep good and clear records of staff on furlough, particularly as it is now possible to allow staff to return part-time. Businesses should also be able to demonstrate clear communication to staff on furlough that explains the rules.”

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