• rradar

HMRC to carry out enquiries into COVID-19 Support Schemes

Updated: Feb 16


As the full scale of the COVID-19 pandemic became apparent, the government responded with a full lockdown, starting in March 2020. For thousands of businesses, this was a potentially disastrous development, with the possibility of huge numbers of redundancies. To avoid this, the government introduced support schemes to enable businesses to retain their staff even while they weren’t able to trade.


The Coronavirus Job Retention Scheme (CJRS, often referred to as “furlough”) and Self Employed Income Support Scheme (SEISS), although a crucial lifeline for beleaguered businesses, had to be introduced very quickly and were, at times, being developed and amended in real time. HMRC were drafting the guidance as quickly as possible and there were issues with this as the guidance evolved over the following months.


This meant that many businesses who sought to make use of the schemes were, in some cases, unwittingly making errors in their claims, despite doing their best to navigate the ever-changing regulatory landscape. Unfortunately, there were also businesses who took advantage of the support schemes to make fraudulent claims, and with the end of the schemes in September 2021, the government decided action needed to be taken.

To this effect, they have recently announced an investment of over £100 million to set up a taskforce that will challenge potentially fraudulent COVID-19 support scheme claims. This investment will enable the taskforce to take on 1,200 staff, who will be needed as it’s believed as many as 30,000 challenges will be carried out.


HMRC action is likely to be in the form of an official enquiry (or compliance check) into claims for these grants. It will no doubt extend beyond fraudulent claims to include ones where HMRC think the claimant may have got the claim wrong. For businesses who are contacted by HMRC in connection with these enquiries, it’s important that they seek early professional advice to support them; tax law is notoriously complex and it’s easy for an untrained business owner to find themselves in serious trouble if they try to go it alone.


HMRC may also seek to charge penalties if it is found that amounts have been overclaimed. We have seen them threaten to levy penalties of as much as 100% of the grants that were overclaimed. That could be extremely damaging to businesses whose finances are already in a very fragile state.


Penalties are focussed on the behaviour at the time of the claim, so it is important to establish why any error occurred. For example, was it the pressure of COVID-19 on the business or perhaps a lack of clarity in HMRC guidance? This important aspect can often be overlooked so it’s crucial that professional advice is sought to maximise your chances of successfully defending any penalty charge.


If you find yourselves subject to a HMRC investigation, then please get in touch with the team at rradar who will be happy to discuss how we can help. Our team has years of experience previously working for HMRC so we can work with you to achieve the best possible outcome. Contact Steve.Tetley@rradar.com (01482 296923) for more information


Legislation

The relevant legislation for CJRS is contained within The Coronavirus Act 2020 Functions of Her Majesty’s Revenue and Customs (Coronavirus Job Retention Scheme) Direction.

The SEISS legislation is contained within The Coronavirus Act 2020 Functions of Her Majesty’s Revenue and Customs (Self-Employment Income Support Scheme) Direction.

Further Treasury Directions were issued to extend both schemes.

Section 76 of the Coronavirus Act 2020 provided HMRC with the relevant functions to administer the schemes on direction from the Treasury.