Furlough Rules Enforcement – HMRC Conducting ‘Virtual’ Visits
Furlough Scheme –
The Furlough Scheme – also known as the Coronavirus Job Retention Scheme – has been a lifeline for many businesses and their employees during the ongoing pandemic. Under the current scheme, the government pays 80% of wages for furloughed employees, meaning companies don’t have to scramble around for funds while closed and workers can keep their jobs until they can go back to work properly again.
By the end of last year, 1.2 million employees had furloughed 9.9 million jobs and claimed £46.6 billion. Without the Scheme, many people would have been left unemployed.
Furlough Claim Issues
While there’s no doubt that the Furlough Scheme continues to help businesses that are genuinely struggling, a whopping £3.6 billion in furlough payments have reportedly been claimed in error. A further £2 billion in furlough money has also been stolen by criminal gangs and this has prompted the HMRC to conduct ‘virtual’ visits and issue penalties.
HMRC Virtual Visit
A HMRC visit can be daunting, but if you’ve followed all of the Furlough Scheme application rules, you shouldn’t have anything to worry about. It’s HMRC’s duty to ensure claims are being made accurately and to prevent fraud, with ‘virtual’ visits allowing them to make the relevant checks safely and in compliance with Covid-19 lockdown laws.
If a virtual visit is requested following a furlough claim, you might be asked an array of specific questions, such as:
- Did you read the guidance before making the claim?
- How was your business affected by the Coronavirus pandemic?
- Who was still working during the pandemic?
- Did the business discuss furlough with employees?
- Did the business issue a furlough letter?
- Can you provide bank statements showing payments to employees?
- Was the furloughed employee contacted while on furlough?
- If furlough staff were contacted, how often did this happen?
- And more…
HMRC Furlough Penalties
Making false or inaccurate furlough claims can result in furlough penalties. HMRC can recover the full amount via a tax assessment. But you also receive a penalty charge of up to 100%. Deliberate furlough fraud can lead to a criminal investigation and a criminal conviction if found guilty. Serious offences include fraud by false representation, false accounting, conspiracy to defraud and cheating the public revenue.
Again, if you’ve followed the furlough procedures and stuck to the rules, you should have absolutely nothing to worry about – even if the HMRC requests a virtual visit. It is, however, absolutely essential to keep accurate records to avoid a more in-depth investigation. If you struggle to provide the evidence the HMRC might request, you’re likely to be subjected to an even more intense virtual visit, but this can be avoided with accurate accounting.
If you’d like any help getting your Furlough Scheme documentation in order, contact us today.