clientcare@treybridge.co.uk 
The last year has seen the government deliver a wide range and enormous volume of financial support to businesses across the UK, ranging from the furlough scheme to a variety of grants and loans. Back in September 2020, HMRC discovered that £3.5bn in furlough payments may have been claimed fraudulently or as an error at their end. As a result, its team is scrupulously investigating possible instances of payments that shouldn’t have been made. 

What happens if I’m investigated? 

The Finance Act 2020 gives HMRC the right to conduct investigations when it believes that there’s a possibility of fraud. If your business has received furlough payments that shouldn’t have been claimed, HMRC also has the power to claim them back from your business. This will be in the form of a tax liability, adding the total figure to your tax bill. 

Additional penalty 

If a business received and retained furlough payments that it wasn’t entitled to, HMRC also has the option to impose an additional fee of 100% of the total. For instance, a business that wrongly took £10,000 of furlough payments could be told to pay back £20,000. 

What about insolvent directors? 

Even company directors that plan to take insolvency are liable, as HMRC has the right to hold directors personally responsible for the fraud committed by their companies. However, it is yet to be confirmed whether HMRC can impose accountability on directors when their company has already commenced an official insolvency process. 
 
On top of this, directors who have taken part in fraudulent furlough payments can be placed under the Company Directors Disqualification Act, banning them from forming, managing or promoting any company for up to fifteen years. 

Legal sanctions 

In the event that a business has wrongly accepted furlough payments and not reported them to HMRC, the directors of the company can also be punished through additional legal actions. The form, severity and likelihood of this depends on the specific situation, such as how much was claimed, how long for, and whether the director realised that they were committing fraud. 

Need some guidance? 

We’re not just accountants, as we also help business owners with other requirements and issues. A conversation with one of our business advisors can help you to gain peace of mind, know how to move forward as efficiently as possible and minimise risk to business continuity, plus we can put you in touch with a trusted commercial solicitor if the need arises. 

Be careful what you claim 

This development gives serious food for thought. Whilst fraud is of course always wrong, it's also crucial that business owners are careful when accessing other government support. Even some loans come with clear stipulations, such as only being for businesses that need to claim it in order to survive. If in doubt, ask us for some guidance before making any binding decisions. 

Get in touch today 

If you think you may be investigated by HMRC or simply want confirmation that your furlough payments were legitimate, we can help. Call our Yorkshire office on 01482 235575, our London office on 0207 885 0605, or fill in our contact form
 
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