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HMRC to list furlough claimants in anti-fraud move

Employers face a dilemma of whether to furlough employees or risk adverse publicity as new measures to name recipients come into force.

9th Dec 2020
Journalist
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HMRC will publish details of CJRS 3 grant recipients
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Chancellor Rishi Sunak ordered HMRC to publish information about employers who submit claims under the extended Coronavirus Job Retention Scheme (CJRS) over December 2020 and January 2021.

The HMRC guidance on CJRS data to be made public includes the name of the employer and company reference, plus the amount of the CJRS claim. Tax officials will post the information within three months of the claim on the gov.uk website. HMRC can withhold publication if the department thinks it would expose any individual to serious risk of violence or intimidation.

The published details will only relate to claims made relating to periods later than 1 December 2020. 

“There are a lot of people on tenterhooks as to what this will look like in February, as that is when the publication will happen in respect to claims from December on,” said payroll lecturer and CJRS expert Kate Upcraft.

“It’s to make businesses focus on whether their operations have been impacted by Covid-19 or, for example, do they normally close down over the festive season and have made a claim just to cover their holiday pay bill, which is not in the spirit of the scheme?”

An employer who only made claims from March to September 2020 and does not intend to request help again will not have their details published. However, employers who started to claim in March 2020 and intend to continue until March 2021 will have their details published for grants covering December 2020 to March 2021.

Negative publicity risks

“Employers may prefer not to submit claims under the extended CJRS, even where they are technically eligible to do so, to avoid this publicity, especially where the employer’s business is profitable,” said Hannah Ford of the law firm Stevens & Bolton.

“However, the risk of negative publicity may be reduced where employers are listed as having submitted relatively low value claims.”

Retailers that remained open during lockdowns have been under pressure to return government coronavirus handouts at a time when their rivals, along with hospitality businesses, have been forced to close.

Several major retailers have returned business rates relief in recent weeks, including B&Q owner Kingfisher, which handed £130m back to the Treasury. Other big names include supermarkets Tesco, Morrisons, Sainsbury’s and Asda, along with Aldi, Lidl, B&M and Pets at Home, taking the total collected to more than £2bn.

“We have seen the response with business rates, where some supermarkets have given back while others haven’t and the Treasury would expect the same sort of consideration by businesses with this,” Upcraft told AccountingWEB.

Opinion is split as to whether the decision to publicise certain personal details is a deliberate tactic by the Chancellor to suppress the number of claims by making the data public, or a legitimate means of bringing transparency to the furlough scheme.

“Many believe that the decision to make the information public is an attempt to deter employers from applying under the scheme,” said legal experts at Nelsons. “It may also be a means to deter fraudulent claimants as they may feel more likely to get caught out once their details are published.”

Fraud reduction

The publicity measures follow recommendations from a recent National Audit Office (NAO) CJRS review that such publicity could help to reduce fraud by enabling employees to see whether their employer was making claims on their behalf, said the Association of Taxation Technicians (ATT).

Large cash handouts have been funnelled away by criminals who took advantage of the minimal testing around the first furlough schemes, which were rolled out in a hurry to keep the economy moving.

The NAO estimated more than £3.9bn of public money may have been fraudulently claimed by businesses bilking the salary support scheme while ordering employees to continue working during the lockdown.

The NAO report concluded that HMRC could have done more to make clear to employees that they were part of a furlough claim. “So HMRC are under pressure to find ways of deterring fraud and publication is definitely one of a range of options,” said Helen Thornley, technical officer at the ATT.

When the CJRS was first launched, HMRC felt that publishing employer’s details risked deterring too many legitimate claims, the NAO found. If employees were not informed by their employer that a claim was made, however, they may not have been aware that of the potential fraud if they continued working.

“The NAO and HMRC identified 5-10% fraud,” said Upcraft. “There were massive instances in the first two schemes because they were ‘pay now, check later’ to get support to businesses as soon as possible. This time around, the formula is ‘check now, pay later and publish who got the money’.”

Many larger businesses, including major financial services firms, decided from the start not to take any of the money to avoid negative public reactions, Upcraft said.  

Personal tax issues

Based on similar proposals for the deferred Job Support Scheme, the ATT expected employees to be able to check if a claim has been made in their name by logging into their Personal Tax Account.

The ATT’s main concern, raised with HMRC, was that information on the precise amount of the claim was not shared as otherwise it might be possible to make inferences about pay where only one or two people are on furlough. “We welcome the fact that information on the amount claimed is going to be disclosed in bands,” it said.

Replies (18)

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By SteveHa
09th Dec 2020 14:32

So I assume that they will NOT publish details where only one or two people were furloughed, since this will expose sufficient information to allow them to be identified, and for their income to be calculated. Or have HMRC not thought that far ahead?

EDIT: By way of example. Business employs 3 people. 2 of them are very chummy with each other, with no secrets. The third less so.

The two chummy ones check how much has been claimed, and then back of a fag packet calculation work out how much relates to employee No. 3. Bang. His salary level has been revealed to the first two. They realise he gets paid more, and so firebomb his car.

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Replying to SteveHa:
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By Hugo Fair
09th Dec 2020 23:00

Sorry, but this example wouldn't work out that way.

The reported value of the claim is to be shown as a band/range value ... the first of which indicates that the total claim (for the month) was between £1 and £10,000.

Due to the cap on a claim for an individual employee, the example business (with total of 3 employees) will be in band 1 irrespective of the salaries of any/all of the employees.

So the 3rd employee's car will be safe (at least from this source of retribution)!

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Replying to Hugo Fair:
By SteveHa
10th Dec 2020 07:58

OK, example 2. Business has a single employee, married. Employee has told spouse that they are not furloughed, when in fact they are, but off to see their bit on the side every day.

Spouse checks, and car suffers the same fate.

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Replying to SteveHa:
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By Hugo Fair
10th Dec 2020 11:32

Fair enough! Reminds of the old (pre-PC) days in Payroll, when I was asked by the recipient of a substantial pay-rise to pay the 'extra' into a different bank account. Why? Because he'd opened the 2nd account without telling his wife (and was paying rent for a love nest from it)!

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By Hugo Fair
09th Dec 2020 23:18

The fraud-prevention thinking behind this approach has nothing to do with the 'naming and shaming' concept mentioned by many ... with the possible exception of very large employers who have demonstrably been earning increased profits.

The hoped-for process goes like this (particularly in the SME sector):
* Employee assumes that ER is not claiming anything, as hasn't been told is on furlough and has continued to receive full pay.
* Because it's now publicly available info, employee decides to check on ER - and finds that CJRS claims have been made.
* As a result, employee decides to double-check on ER by looking on PTA (personal tax account facility), where it will show exactly how much (if anything) has been claimed by ER on behalf of employee's employment.
* If the result = employee not on furlough but ER in receipt of money for that employee, then the employee has option to blow the whistle on ER ... which is what HMRC are encouraging.

Of course, employee may choose to attempt blackmail of boss instead ... but that's a whole different kettle of fish!

N.B: in case it's non-standard, ER stands for employer throughout.

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By johnjenkins
10th Dec 2020 09:52

This is obviously a scare tactic to lower future claims.
If HMRC need to publish stuff to catch fraudsters then we are all in a very sorry state.
Anyway the fraudsters have and always will get away with it. Why? because there is an attitude of "can't be bothered" unless we don't have to do too much work. Let's just go for the easy targets. Bank fraud can be stopped so easily. How come ordinary people have problems opening bank accounts and fraudsters don't?

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By tomsbookkeeping
10th Dec 2020 10:52

Hi all,

Will this affect company credit rate? I am running a LTD with my wife. Our office is closed and my wife doesn't do any job duties because of it and gets CJRS. I have got an employee who is on CJRS too. I will be applying for a mortgage and I don't how banks will treat all of this.

Any idea?

Thank you
Thomas

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Replying to tomsbookkeeping:
By jon_griffey
10th Dec 2020 11:09

I have been told by mortgage brokers that lenders are taking a dim view of mortgage applicants that have been furloughed - even if they are back to work now. They take this as evidence that the employer is struggling and the employment may not be secure.

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Replying to jon_griffey:
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By tomsbookkeeping
10th Dec 2020 11:18

Thanks Jon,

It means I have a choice to make somebody unemployed and looks ok for lenders or keep this person employed and look very bad for the lenders.

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Replying to tomsbookkeeping:
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By johnjenkins
10th Dec 2020 11:45

I've just heard of a case where Santander pulled the plug after contracts had been exchanged, due to updated information. Lenders will be more careful not just this year but going into next year as well. We also have the Brexit scenario which could result in less income for some. I have heard that CJRS will not affect credit ratings.

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By GodHimself
10th Dec 2020 17:47

Complete waste of time.
Hmrc have more pressing matters to be dealing with but instead are wasting there time publishing these stupid lists.

My son worked for a building company last year and left the company In February. That same company are still to this date 10 Dec claiming furlough and keeping the money. We Confirmed this and have passed all the details through to hmrc and yet hrmc have made it extremely difficult to report someone and then after providing them with all the details they have replied and said they are to busy to look into it.

So a conete waste of time.

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Replying to GodHimself:
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By Paul Crowley
10th Dec 2020 18:30

That might be what you think
HMRC do not release or concur or disagree allegations of fraud.

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Replying to Paul Crowley:
By SteveHa
11th Dec 2020 09:45

And they do not keep the informer appraised. That would be contrary to the OSA.

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By ireallyshouldknowthisbut
11th Dec 2020 09:17

Well its saving HMRC money.

I have had 2 clients pull out of making claims when I mentioned this to them a couple of weeks ago.

One was worried about mortgages, another (a contractor) worried that it would look like they were not in demand from a recruiter point of view.

Net saving all of about £800 over those two clients, but its saving 'em cash.

I hope agents have been telling their clients about this from the off or they are going to have some grumpy clients.

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Replying to ireallyshouldknowthisbut:
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By johnjenkins
11th Dec 2020 09:27

I really don't know where the problem for business is. If covid has affected your business adversely (meaning you have no or less work for your staff) then you claim. The problem is that it has cost the Government a lot more than was predicted. The starting point was £330b. I think we are over the £400b already with another 4 months, at least, to go.

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Replying to johnjenkins:
By ireallyshouldknowthisbut
11th Dec 2020 09:52

@john, for decent sized business i dont think its an issue, but for micro ones its reputational and potentially credit risk. My clients making claims are almost all director only, and they are often getting something like half of 80% of £700 so its hardly worth having.

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Replying to ireallyshouldknowthisbut:
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By johnjenkins
11th Dec 2020 10:21

Yep I have a similar problem and I think it's totally wrong that dividends have not been taken into account, considering tax returns had already been submitted so the dividend element couldn't have been changed.

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By Arcadia
11th Dec 2020 17:45

The implication of publishing the list is that the Government is saying there is something not quite right. It is saying 'we will put this out into the court of public opinion.' 'Lets see what Joe public thinks about say, accountancy firms or lawyers claiming 'benefits''. In this way they are hoping to discourage claims. The prevention of fraud argument is a miniscule fig leaf.

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