Businesses could face significant penalties for COVID-19 support errors, warns Thorne Widgery - Thorne Widgery

Hereford and Ludlow accountants, Thorne Widgery, is warning business to take extra care over the claims they make for COVID-19 financial support, such as the Coronavirus Job Retention Scheme, as HM Revenue & Customs (HMRC) is proposing new power to tackle abuse and errors.

New draft legislation has been published by the tax authority which reveals that they could be given new investigative powers to review any claims made and issue penalties.

With fines of up to 100 per cent of the funding claimed being suggested, Daniel Crowther, CEO at Thorne Widgery, is warning firms to review the claims they are making so that they do not fall foul of HMRC in future.

“The last thing a struggling business needs just as they are recovering from this pandemic is a fine from HMRC for an error made when claiming support,” said Daniel.

“The Government is under immense pressure to recover funding from any fraudulent claims, which is understandable, but there are likely to be many businesses out there who may have made a simple error which lands them in trouble.”

Of more concern to some directors and business owners though is powers within the draft legislation that would allow HMRC to pursue claims against individuals as well as businesses.

Daniel said: “The proposed legislation will also give HMRC powers to pursue any individual connected to a company found at fault, which will make them jointly and severally liable for the assessments on the furlough scheme. These rules will apply where a company is not able to repay claimed amounts, which may be the case for many cash-strapped companies.”

While these rules have not yet been enshrined in law, Thorne Widgery says that businesses need to be prepared for HMRC to take a tough approach when it comes to recovering money that it believes has been provided improperly via the Coronavirus support measures.

“Businesses must take steps now to understand the conditions and criteria of the support offered and ensure claims are fully compliant,” said Daniel.

“As the Coronavirus Job Retention Scheme has evolved and changed it has become more complex and its latest extension brings new rules regarding part-time working and employer contributions.

“Businesses need to be maintaining an accurate record of their calculations and communications with furloughed employees to evidence the claims they make.”

Thorne Widgery said that any outcome of a future investigation into COVID-19 financial support claimed by a business would likely hinge on the supporting evidence offered and the steps taken by an employer to ensure conditions were met and demonstrate any errors were not deliberate.

If you need support with the Coronavirus Job Retention Scheme and the changing furlough process then contact us.