HM Revenue & Customs are taking a carrot and stick approach to employers who have either inadvertently or fraudulently claimed too much or wrongly through the Coronavirus Job Retention Scheme. Now, however, they have identified 27,000 ‘high risk’ cases that contain disparities with the data they hold.

The number was given by the Chief Executive of HM Revenue & Customs (HMRC), Jim Harra, in appearance before the Public Accounts Committee in Parliament. The committee investigates value for money for the taxpayer. He also revealed that as much as five to ten per cent of furlough money could have been wrongly given, equating to between £1.75bn and £3.5bn, based on their own risk assessments.

The employers in these identified cases will now be contacted by the end of November as part of a government campaign. It follows action which began last month when approximately 3000 businesses were contacted about their claims and asked to get in touch.

HMRC insist that employers who have made an honest mistake will be given the opportunity to work with them to put it right, and has published guidance on steps to take if a claim has been wrong. It provides advice on how to correct further claims and to arrange a voluntary repayment.

For those employers who do not take this opportunity to correct any wrong claims then these will be pursued through one-to-one investigations and can expect tough action if wrongdoing is uncovered. The expectation is that 10,000 of these will be followed up in this way.

At the same time, HMRC will continue to encourage employees to report their employer if they believe that they are abusing the scheme through its fraud hotline. Mr Harra revealed to the committee that 8000 calls have so far been made to report fraud.

The CIPD view

CIPD Chief Executive, Peter Cheese, said: ‘The HMRC is taking a measured and reasonable approach to identifying and tackling misuse of the furlough scheme, recognising that in many instances where there have been inappropriate claims, employers have made honest mistakes and that seeking to work with them to address these is the best way forward.’

‘However, it is also right that HMRC proactively investigates cases where there is suspected fraud and takes a much harder line with the imposition of penalties and criminal investigation where appropriate.’

‘The scheme required trust in employers, and employees, doing the right thing and businesses must show that they acted with integrity. It is concerning that HMRC believe as much as 10% of what was paid out on the scheme may be incorrect, which not only may have immediate financial implications for some, but also reputational issues that may be more lasting. In these challenging and uncertain times, it is even more imperative that businesses act responsibly for the good of all their stakeholders.’

The CIPD has worked closely with HMRC to provide information and guidance for members on the furlough scheme on our Coronavirus Hub throughout the pandemic. We will be providing further support to help members identify any errors and take action to rectify them.