The introduction of the Coronavirus Job Retention Scheme ("the scheme") has represented a challenge for employers and for HMRC. By the end of May, HMRC had received almost 1900 separate reports of fraud in relation to the scheme. We have previously discussed the susceptibility of the scheme to fraudulent claims and outlined important steps that employers should take when accessing it.

The Government has now indicated its intention to grant HMRC new powers in relation to funds paid out to employers who have accessed the scheme. These powers are expected to come into force in July 2020.

New provisions

Under the new provisions, employers who have accessed the scheme but failed to comply with its conditions are liable to have the funds they received 'clawed back' by HMRC, irrespective of whether the failure to comply was deliberate or inadvertent. Employers who become aware that they have accessed the scheme but failed to comply with its conditions are under an obligation to declare this to HMRC.

Importantly though, once the provisions are in place, employers will only have 30 days to make any necessary declaration. Employers who fail to make a timeous declaration face not only having funds 'clawed back' but also the prospect of a financial penalty. Time, therefore, will be of the essence for employers who find themselves in difficulty relating to the scheme.

Existing provisions

In addition to the new powers for HMRC to 'claw back' and penalise employers who access the scheme without complying with its conditions, laws already exist under which employers may face criminal prosecution.

In Scotland, a person who makes a false declaration in order to secure a particular outcome commits a criminal offence. Therefore those who have provided false information in order to access the scheme may face prosecution.

In addition, employers have a duty to ensure that no one in their organisation facilitates tax evasion. Where, for example, a junior manager within an organisation encourages their staff to carry out work for the business despite them receiving payment through the scheme, the organisation itself risks being held criminally responsible for failing to prevent this. We discussed the latest developments with the corporate crime offence at our recent webinar which you can find here.

Business response

Given the potential risks they face, businesses should maintain detailed records of their decision-making in relation to the scheme. Employees, from boardroom to shop floor, should be made fully aware of their obligations, and the potential consequences of failure to comply with these.

Should a business find itself in any doubt as to whether its access to the scheme has complied with the scheme's conditions, it is imperative that it takes appropriate advice quickly.

For more information, please contact Paul Marshall or your usual Brodies contact.


Lucy McCann


Tony Convery