The Coronavirus Job Retention Scheme (CJRS) was introduced with the aim of safeguarding UK jobs during Covid-19 and has almost certainly gone a long way to do so. Under the CJRS, businesses have been able to furlough staff rather than make them redundant, with the furloughed staff receiving up to 80% of their wages from the Government in the form of a grant paid to the employer, with an upper limit of £2,500 per month. The CJRS is due to end on 31 March 2021.

A number of factors have left the CJRS open to abuse, including the speed with which it was introduced and the intricacies of the CJRS rules. HMRC has acknowledged the inevitability that some employers may have inadvertently breached the rules.

Might this impact you as an employer?

The Finance Act 2020 gives HMRC substantial enforcement powers in relation to the CJRS. In particular, Section 106 and Schedule 16 to the Act, entitles HMRC to claw back CJRS payments made to businesses which were not entitled to receive them, or where it can be shown that the payments were not used to pay employment costs.

What if the business is insolvent?

Where a business has become insolvent or insolvency is considered likely, HMRC can make Directors jointly and severally with each other and the company for the company’s liability where there has been a deliberate decision to claim or retain CJRS grants, to which the company was not entitled.

What are the sanctions?

A financial penalty can be given if the company fails to tell HMRC it was not entitled to the CJRS grant and the Directors knew this. The penalty may be as high as 100% of the lost revenue if it can be shown there was a deliberate concealment.

If enforcement action is taken, the penalty will not be less than 30% if the money is repaid at an early stage; criminal charges are also an option for HMRC.

If employers notify HMRC that they have received a payment to which they are not entitled before enforcement action is taken, that may result in no sanctions being imposed but there are strict time limits within which the notification must be made.

If the company can’t or won’t pay, HMRC won’t be shy in taking action against the Directors personally.

What should you do?

If you have received a CJRS grant, we would encourage you to carry out a full review of your records to ensure that you have not fallen foul of the rules and potentially become liable to enforcement action.

It goes without saying that the Government will be keen to recover any payments it can show the company was not entitled to, and I suspect that, when the CJRS ends in March 2021, proactive steps will be taken to do so, with dedicated resources being made available given how much is potentially up for recovery.

If you would like to discuss anything within this article, please contact Marcella Cox on 020 8515 1968 or by email on marcella.cox@vyman.co.uk.

Furlough and Bounce Back Loan Fraud

As the country begins to recover from the disruptions caused by the pandemic, the authorities will be investigating  fraudulent claims made via various government funding schemes that were created to help people through the crisis. If they suspect a claim was fraudulently made, they will be looking at ways to recover the money. 

The two main schemes are the Furlough scheme and the Bounce Back Loan scheme. (Payments under the ‘Eat Out to Help Out’ scheme will also be scruitinsed).

So far, HMRC has identified 27,000 high risk claims under the furlough scheme. It is estimated that £3.5 million pounds was fraudulently or incorrectly claimed. The time for self-declaring a mistake or a change in circumstances in relation to furlough payments ended on the 20th of October 2020. That means HMRC can treat any unwarranted payments that come to light after that date as deliberate or concealed. The claimant is then facing a penalty payment of up to £100% of the claim or prosecution. 

The ‘Bounce Back Loan’ scheme enabled smaller businesses to quickly access cheap finance during the pandemic. £35 Billion was paid out very quickly, with minimum scrutiny of the applications. It is suspected that many claims were made where the turnover of the company was deliberately inflated in order to qualify for a greater loan. If an investigating authority thinks the over-estimate of turn-over was deliberate, it may decide to prosecute the claimant.  Additionally, the regulated sector, may find themselves at risk from allegations of money laundering. For instance, where an accountant, may have handled furlough money or a bounce back loan in circumstances that required them to make a SARs report. 

If, after being in receipt of government funding, a person becomes subject to such an investigation. It is advisable to seek professional legal advice as soon as possible, in order to minimise as far as possible, the matter escalating into a prosecution. 

Tim Davies, our Criminal Defence Solcitor says, “Currently , the court estate has a huge backlog of cases waiting to be tried and so prosecutors are more willing, in certain cases, to be pragmatic. It may be that sensible, careful discussions with the investigator will result in an out of court settlement or no further action”.

Our Solicitors are approachable and deliver a highly professional service. If you are comparing us with other law providers, remember we are authorised and regulated by the Solicitors Regulation Authority, our team have years of experience between them. 

Our firm is long established and we pride ourselves on our excellent client care. We are here to help and guide you with an initial fixed fee consultation (£125+vat), following that the solicitors hourly fees are applied (£250+VAT).

Please note that you need to formally instruct us or arrange an appointment before we can consider your matter or give you any advice. We do not accept instructions on a “no win, no fee” or legal aid basis. 

Contact our Criminal Defence solicitors in Ruislip, Middlesex

The locally-based lawyers at The Sethi Partnership Solicitors have been providing specialist legal advice for a diverse range of clients since 1994. Whatever your circumstances, speak to one of our trusted solicitors today to discuss your case.

To arrange an initial appointment, call us today on 0208 866 6464 or complete our online enquiry form.