The Chancellor of the Exchequer Rishi Sunak is expected to announce within Wednesday’s budget the expansion of a Taxpayer Protection Taskforce backed by an additional £100m of Government funding to investigate incorrectly-claimed Furlough and further measures to examine the abuse of Bounce Back Loan payments, according to The Independent.

It is reported that the Taskforce looking at furlough payments will comprise a team of more than 1,250 HMRC officials, who will forensically examine employers’ and employees’ records to check for evidence of any abuse of the schemes.

The Government Guidance published to help employers engage with the £54bn furlough scheme was at times light on detail, complex (particularly part time furlough for certain hourly paid staff) and has been subject to numerous changes over the past 12 months. As a result, many employers may have made claims for furlough grants incorrectly either by means of an innocent mistake or confusion arising from the inconsistent advice issued at the time. Further, there may in some cases have been some negligent misstatement as to the position or indeed, deliberate fraud where staff were dismissed but furlough claims continued to be made for those employees, or where workforces were ‘swapped’ to enable two employers to continue with a working workforce whilst at the same time claiming furlough payments.

In September 2020, HMRC’s permanent secretary estimated that up to 10% of payments under the scheme (which stood at around £54bn as at mid-January) were being claimed incorrectly or fraudulently. Approximately 10,000 inquiries into suspected abuse of the Furlough scheme, and in some serious cases criminal investigations have begun. With the expected announcements on 3 March 2021, it is apparent that more enquiries will be opened and that HMRC has the resources and support it requires to drive these forward. As a result, employers must ensure that money received under the Furlough scheme has been correctly claimed and correct any errors as soon as they are identified.

Measures to further tackle fraud in the Bounce Back Loan scheme are also expected during the Budget announcement. It is currently understood that this will build on guidance issued to lenders. However, it is likely that the use of funds borrowed from the Bounce Back Loan scheme will also be subject to closer scrutiny, with potential far-reaching consequences for businesses and their directors, including insolvency claims, directors’ disqualification, directors’ personal liability and criminal prosecution.

Edwin Coe’s Multi-Disciplinary team: ready to help

Edwin Coe has created a cross-departmental team to advise employers and directors in connection with furlough grant payments and the use of bounce back loans. The team is led by Linky Trott, Sean Bannister and Ali Zaidi, who head up the Employment, Tax, and Restructuring & Insolvency departments respectively.

The team has recently hosted a webinar which sets out some of the possible issues, what can be done and how Edwin Coe can help to mitigate any issues which may arise in respect of these schemes.

You can view a recording of the webinar here: https://register.gotowebinar.com/recording/1379381730715024399

If you wish to speak to one of the team about any concerns you may have, please contact Linky Trott, Sean Bannister or Ali Zaidi directly.

Please note that this blog is provided for general information only. It is not intended to amount to advice on which you should rely. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content of this blog.

Edwin Coe LLP is a Limited Liability Partnership, registered in England & Wales (No.OC326366). The Firm is authorised and regulated by the Solicitors Regulation Authority. A list of members of the LLP is available for inspection at our registered office address: 2 Stone Buildings, Lincoln’s Inn, London, WC2A 3TH. “Partner” denotes a member of the LLP or an employee or consultant with the equivalent standing.

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