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Treasury Gives HMRC Power To Reclaim COVID-19 Payments

Rishi Sunak is to add legislation to the Finance Bill that will allow Her Majesty’s Revenue & Customs (HMRC) to go after those who have broken the COVID-19 support payment rules and claim back hundreds of millions in falsely claimed furlough and business grant payments.

According to iNews, HMRC will be turning their attention to several high-profile companies that it believes may have asked staff to work, despite taking the 80 per cent furlough payments from the Treasury’s Job Retention Scheme (JRS).

If a company is revealed to have broken the JRS rules, which prohibit furloughed staff working while receiving up to £2,500 a month to stay at home, HMRC will impose a 100 per cent tax rate on the payments.

This unusual step, which has been branded ‘draconian’, effectively introduces a new tax band, which would ensure HMRC to use its existing powers to prosecute firms that fail to pay tax demands from the COVID-19 payments it believes were obtained incorrectly or misused.

Once the new legislation has been passed, any business or individual that has received cash from the JRS or the Self-Employment Income Support Scheme (SEISS) will have 30 days to declare a mistaken application and pay back the furlough cash or loan without any penalties.

However, if HMRC decides an undeclared mistake has been made after considering filed accounts for the last financial year and the current one, it will launch an investigation and force those accused to show they did not break any COVID-19 support payment rules.

A spokesman for HMRC said: “HMRC can already refuse to pay claims that they think are fraudulent or abusive, but these measures will ensure we can properly investigate and recover overpayments and penalise deliberate abuse of the schemes.”

If you need a tax accountant in Maidenhead, come and talk with us today.

Published On: June 23, 2020

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