HMRC arrears collection action post Covid-19 and Furlough Investigations
Lisa Tabor
HMRC Time To Pay Specialist + help with business debts and Over-Drawn Directors Loan Account mediation services.
As we are all aware the pandemic that was the coronavirus has affected economies globally.
Such an unprecedented event has turned many peoples private and business lives upside down.
During this time HM Revenue & Customs have maintained a distant stance on collecting arrears. They have offered numerous supportive schemes to help businesses try to continue trading and have retracted petition cases, with no further ones being issued. They have moved pre set deadlines to allow submission of returns and bills to later dates and temporarily stopped applying interest and charges to certain overdue liabilities.
However, the economy has to try and return to normal and I think we are all aware that HMRC would like some money back ‘in the coffers’ so to speak.
They have been somewhat in hibernation but now, owing to lockdown measures slowly being lifted they are starting to emerge and demand new powers.
HMRC have started prosecuting and investigating individuals and companies in relation to furlough scheme fraud, with arrests having already been made. These individuals and companies are subject then to computers and devices being seized and bank accounts being frozen.
See articles available online for further news reports on this is, such as:
The furlough scheme provided by the government was intended to help businesses pay employees wages during this time, all be it at a lower rate. There have already been over 1900 tip offs made to HMRCs digital reporting service stating misuse of these funds.
HMRC have now started investigation claims via the Furlough scheme to ensure that such payments have actually been used to pay furloughed employees and that these funds have not been used for anything else.
There are 3 main suspected types of furlough fraud identified:
- A company furloughs staff but asks them to continue to work or volunteer unpaid
- The company furloughs staff without telling them. The workers only find out when they are paid
- A company claims furlough money for a “ghost” employee who may be someone they dismissed or “recruited” so they could claim the money.
HMRC are intending on raising assessments to recover payments made that have been fraudulently claimed – leading to potentially large liabilities becoming due.
They will also be able to charge additional penalties – They are going to come down heavy and recoup any incorrectly used government funds. As HMRCs own systems would need updating and changing to reflect these calculations there is an extremely good chance that these investigations will continue for a considerable time, months or even years (even following the scheme closing)
Further to this, even if other parties were not aware that a single Director perhaps misused the schemes, HMRC intend to hold all Directors accountable for the fraudulent claims.
Up to June 2020 there was circa ￡17.5 billion that had been paid out in government grants to around 8.7million people who have been furloughed. More than a million employers have used the Furlough scheme – a scary statistic if we assume these funds will be chased back in, one way or another!
Charity 'Protect' said last month that 36 per cent of coronavirus-related calls taken by its advice line since the start of the pandemic had involved employers fraudulently taking advantage of the government scheme, either by forcing staff to continue working despite paying them through the furlough scheme, or by claiming furlough funding for staff without their knowledge while they were still being asked to work.
Bills being fast tracked through parliament will propose giving firms 30 days to voluntary admit ‘errors’ on any schemes used.
We have worked with our clients for over 20 years now, specialising in helping individuals or companies re pay HMRC tax arrears. We have seen how supportive HMRC have been during the Covid-19 pandemic. Further to this we have seen how hard it has been to reach any department within HMRC, owing to staff being moved to cover the Covid helplines and schemes. As we look to enter August, we have been given a clear message from HMRC.
HMRC do not want people to use Covid-19 as an excuse for non-compliance and not paying their tax. There is noticeably clear definition required on the business’ financial situations prior to and post Covid-19.
HMRC have expected everyone to continue to pay their current taxes, if possible, during the pandemic but now they are leaning heavily towards their collection processes kicking in extremely quickly to chase arrears in again. Our advice would be to simply be proactive in this regard, do not sit back and wait for HMRC to contact you! Contact them.
Time to pay arrangements are the way to ensure you reach an agreeable payment plan for any type of tax arrears and we have been advised that the narrative provided about businesses issues must cover prior to and post Covid activities/impact. Each time to pay proposal will be reviewed on a case by case basis.
We have specialised in writing proposals for over two decades and understand what HMRC will be asking of your business and we will continue to support our clients to gain control again of the business.
Do not let HMRC force you into a plan you cannot afford.
If payments cannot be adhered too, this will then become a failed arrangement. Meaning it may make it extremely difficult to agree anything further. What is important is the approach and the communications with HMRC, which are key.
We have seen hundreds of clients who fail their time to pay arrangements as they agreed to something direct with HMRC, they were pushed into. Subsequently panicking and then being unable to make those payments. Our structure and support can give your affordable proposal it’s best chance of success with HMRC.
We would also say that it is wise to be proactive, where possible, the more time that passes the more aggressive HMRC will become.
There is always help out there, don’t let HMRC bench your business if you can fight.
Talk to us today for any further information on how you can ease your businesses difficulties at this time.
https://www.taxdebtshelpandadvice.com/time-to-pay-arrangement/
0800 448 0293