Successfully Reducing HMRC Penalties in an Furlough Fraud Investigation

  • The company submitted furlough claims during the lockdown periods, and HMRC questioned elements of the claims. They questioned two aspects –
  1. Company made a furlough claim out of time. The company did not make the June furlough claim in time, and therefore combined the June and July furlough claims into the July furlough claim. HMRC claimed the company was not entitled to the claim.
    1. There were strict timelines in place
    2. Where sums were claimed out of time they were not permitted
  • Director felt this was not made clear and it was difficult to get advice at the time
  1. HMRC questioned that some of the furlough sums claimed by the company did not match the salary sums paid to the employees. Director advised that at the time, most of the 30/40 staff did not wish to work and that they all wished to be furloughed. Therefore they came to an internal agreement with the staff, that those furloughed would pass on a percentage of their furlough payment on to the staff which did continue to work.
    1. A Company cannot claim furlough sums that were not paid directly to those staff on furlough
  • HMRC wanted these sums back, and advised that they may issue wrong going penalties.
  • Client was liaising with HMRC for past few years before approaching Altion Law for advice
  • Altion Law fully explained the position re both aspects and the clients position to challenge and explained HMRC formal assessments and penalties as well as the process of appealing to tax tribunal.
  •  HMRC accepted arguments and agreed to reduce penalties.