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.
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.”
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.