Stay alert – tax investigations resume after pandemic pause!

HMRC has this month (June) resumed its tax investigations after a two-month pause during the coronavirus outbreak. Investigations were generally suspended at the start of April to help free up resources for the plethora of business support schemes available to help companies weather the pandemic storm.

Over the last two months HMRC has focused on paying out relief under the Coronavirus Job Retention Scheme and overseeing the Government’s VAT and tax referral schemes as well as offering support and guidance for companies.

So now that normal service has resumed, what does that mean for us business owners?

Claw back

Stay alert! There is likely to be a sting in the tail. The Office for Budget Responsibility estimates that the total cost of the pandemic could be almost £300bn and the schemes to support public services, business and inpiduals, such as the job retention scheme will cost around £123bn.

As the economy struggles, the Government – through HMRC – will be keen to claw back as much as possible to aid public finances.

HMRC has already stated in its CJRS guidance that it will check claims made through the scheme. The guidance states that: ‘HMRC will continue to monitor businesses after the scheme has closed’ giving an indication that there will be rigorous examination of whether employers have adhered to the conditions on furloughing their employees.

Warning

HMRC has already warned that payments may need to be repaid in full if a claim has been based on dishonest or inaccurate information.

All this indicates that there is likely to be an increase in investigations in the months ahead. Before the pandemic, HMRC had hardened its attitude on enquiries and the signs are that this will continue particularly where HMRC believes any claimant has not kept to the CJRS rules.

This may mean action to recover payments if HMRC finds evidence that the calculation for the job retention scheme claim was incorrect or if they suspect an employer has tried to use the scheme when they were not eligible.

What you should do?

If the analysts are correct we can expect increased and tough investigations ahead. Our advice to you if you are an employer who has used the furlough scheme is to make sure you have been meticulous in maintaining clear and detailed records. We can help provide advice or information to guide you with this.

Our other recommendation is that you make sure you are covered by tax investigation insurance.

At Turas we use Croner Taxwise investigation insurance which covers our clients for any professional fees resulting from an investigation by HMRC. It gives us access to an experienced team of specialist in-house tax and VAT consultants to help our clients deal with an HMRC investigation.

As the lockdown eases and the economy tightens it’s an extra safety net to help keep your company on track and thriving as we all adapt to the new normal.