It has been reported recently that the government will invest over £100m to combat the estimated £3.5 billion fraudulent claims of Covid-19 support packages. This will involve a team of more than 1,000 HMRC staff. Clearly, there is an intention to investigate fully all areas of concern.
However, currently big business investigations are already taking up to 4 years to settle with Inspectors taking longer to settle enquiries. Quite how the new Inspectors will be redeployed is a matter of conjecture but it is clear that the attitude taken needs to change. Currently, many enquiries involve a plethora of information requests, sometimes specious, with the threat of penalties for non-compliance.
There is now a further twist regarding offshore tax crackdown. HMRC has been supplied with International tax data via an agreement signed by more than 100 countries. Already warning letters have been sent to many UK residents and it is proposed this action will increase as a clear drive to clamp down on offshore tax avoidance with the window for enquiries extended to 12 years. There are now enhanced penalties to punish late and unpaid tax bills possibly as much as twice the tax at stake.
So, it would appear there could be pitfalls ahead for many unwary taxpayers. It goes without saying that anyone faced with a challenge from HMRC should seek professional advice immediately.
Please do not hesitate to contact any of the tax team if you would like to discuss this further.
Were furlough payments operated correctly?
One area that HMRC is likely to investigate is furlough pay funding claimed under the Coronavirus Job Retention Scheme.
In addition to HMRC using Real Time Information submissions to check claims, HMRC is publishing monthly data detailing the employers that have claimed and the ranges of amounts claimed. Any employees can check whether they have been included on a claim via their personal tax account online from December 2020. These publications can leave employers more exposed to whistleblowing from employees, even if incorrect claims have been made unintentionally.
With the ever-changing rules surrounding the scheme, such as more employees being eligible from May 2021 with a new reference earning period, calculations of furlough pay claimable are becoming more complex. This may leave companies more exposed than ever to inaccurate claims and a subsequent HMRC enquiry.
It is recommended that any claims made to date are reviewed and if any erroneous amounts are found, these should be reported to HMRC. This may help mitigate any penalties and extensive and costly enquiries.
Kilsby & Williams’ payroll team can provide a comprehensive compliance check of any claims you have made to identify any areas where non-compliance may have occurred and can help in the procedure to resolve this with HMRC.
If you would like more information on this, please contact the team at firstname.lastname@example.org or 01633 810081.