With so many people eligible to claim furlough or Self-Employed Income Support Scheme (SEISS) payments, it comes as no surprise to learn that HMRC will be investigating claims to ensure they are compliant with the law.

This first came to light in October 2020. Read on to find out more about what could happen and the potential implications of fraudulent claims.

Time’s up

The permitted time frame for people to report claims made in error has now long passed, and HMRC are permitted, via the Finance Bill, to conduct in-depth investigations into claims. After October 20th, 2020, HMRC could commence investigations into suspected fraud and have the power to take civil and criminal action against any guilty parties.

This applies to any recipients of SEISS support, meaning that it would be wise for anyone who is uncertain to contact an expert, such as a business accountant in South Yorkshire or wherever they are based, for guidance. Both businesses and individuals were advised to double check their claims to ensure they were correct, prior to the autumn 2020 deadline.

The consequences

While HMRC and the government have demonstrated some understanding during the pandemic and have offered much-needed support to all kinds of employed and self-employed people, there could be grave consequences for anyone making incorrect or fraudulent claims.

It’s not only a matter of possible prosecution. If businesses or individuals over claim, having to later pay back this sum could be the final straw for a business that is already struggling. If directors themselves are pursued by HMRC, limited liability may not apply.

For the SEISS, taxpayers had to make the claim themselves, rather than using an agent. Naturally, this has the potential to lead to errors, and the eligibility criteria for the scheme is complex and can be confusing.

Businesses must show they have been adversely affected by the pandemic, and they should not have made a profit or more than £50,000. In the latter case, HMRC will check tax returns and may request a repayment if more money than this has been made. It may also question, for instance, whether businesses could have operated and made a profit safely, rather than relying on government grants.

Check for errors

Despite all this, taxpayer rights do still apply to SEISS compliance investigations. These include basic entitlements to confidentiality and privacy and a right to representation if interviewed.

The best course of action is to check, without delay, that any SEISS claim has been made correctly. If any errors are not declared, they may be viewed by HMRC as deliberate and thus fraudulent. A large penalty could apply in such cases, whereas anyone who admits errors straightaway may well end up much better off – both financially and in terms of experiencing less stress.

Accountants are best placed to deal with any issues as soon as they arise, having in-depth knowledge of the latest government grant guidelines. Speak to us at Adaptive Accountancy if you have any concerns regarding your SEISS claim.