The Government is to give HMRC draconian new powers in an attempt to claw back hundreds of millions in falsely claimed furlough and Covid-19 business grant payments.
Rishi Sunak
will add legislation to the Finance Bill next week that will allow HMRC to go after those who broke
coronavirus support payment rules.
HMRC is expected to focus on a number of 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 HMRC suspects a company has broken the rules of the JRS scheme, which do not allow furloughed staff to work while receiving up to £2,500 a month to stay at home, it will impose a 100 per cent tax rate on the payments.
The
Treasury’s decision to take the unusual step of effectively introducing
a new tax band has been made to ensure HMRC can use existing powers to
prosecute businesses that fail to pay tax demands from Covid-19 payments
that it believes were misused, obtained incorrectly or not necessary.
HMRC will also be handed powers to target beneficiaries of the Self-Employment Income Support Scheme (SEISS)
and small companies that received grants of up to £25,000 to help them
through the crisis. If HMRC suspects a business did not actually require
a loan, or that a sole trader ceased trading soon after receiving money
from the SEISS scheme, it will be able to put the burden on those
investigated to prove otherwise.
The draft legislation to hand HMRC the tough powers will be added to the Finance Bill,
which is currently making its way through Parliament and is expected to
receive Royal Assent from the Queen by the middle of next month.
Once
passed any business or individual that has received cash from the JRS
or SEISS schemes, which are due to come to an end on 31 October, will
have 30 days to self-declare a mistaken application and pay the furlough
cash or loan back without penalty.
If, however, 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.
Ultimately, a failure to pay 100 per cent to cash back to HMRC could result in criminal prosecution.
A
spokesman for HMRC is quoted by inews:
“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.”
Tax does have to be taxing.
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