HMRC cracking down on emergency cash fraudsters

Over 3,000 UK companies have voluntarily repaid over £760m in furlough grants to HMRC. Many that claimed furlough money in the early stages of the pandemic turned out to be in a stronger financial position than expected. Now HMRC is shifting focus towards emergency cash fraudsters. So what are the potential penalties for any business and business owners that incorrectly claimed emergency money?

Crackdown on fraud

The pandemic raised the fraud risk affecting emergency grants and bounceback loans. According to HMRC, the level of fraud on CJRS schemes is around 5-10% and 1-2% for the self-employed scheme. Moreover, it is estimated that between 35% and 60% of bounce back loans may not be repaid. Early signs of fraud on Covid loans are expected to start showing next month as the first repayments fall due.

Significant penalties

Apart from the significant reputational risk, companies that exploited funds are likely to face a criminal investigation or steep civil penalties. Those that do not notify HMRC of the overclaimed grant will fall under a ‘deliberate and concealed’ activity leading to a penalty of up to 100 per cent of the grant. In case a business is unable to repay loans and enters liquidation, a director may be penalised by disqualification.

Contact us

For advice on the director’s duties and obligations, or managing a business in distress, please contact us today. If you are concerned about your company finances, then please do not put it off. The sooner you contact professional help, the higher the chances of rescuing the business. Contact us to arrange a free impartial consultation.

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