According to a new academic study, up to a fifth of employers may have encouraged staff to continue working despite being furloughed, while 63 per cent of furloughed workers have decided to keep working anyway.
This new report, prepared by economists Abi Adams-Prassl, Teodora Boneva, Marta Golin, and Christopher Rau, showed that in April and May, furloughed employees ignored the Government’s prohibition on working while on Coronavirus Job Retention Scheme (CJRS), with only 37 per cent of respondents abiding by the guidelines.
The new study found that of those who could conduct at least 50 per cent of their job from home, only 19 per cent followed the strict furlough rule, with the average furloughed worker completing only 25 per cent fewer hours then they had done before lockdown.
When it came to employers asking staff to work, 19 per cent of workers said they had been asked to continue working while furloughed. The issue was more prevalent in sectors that involved computer and mathematical work, where 44 per cent of furloughed workers were asked to continue working, despite being furloughed. 
Businesses that decide to ignore the CJRS rules could face a substantial fine from HM Revenue & Customs (HMRC) or even face an arrest for fraud. 
In July, a man from Solihull in the West Midlands was the first to be arrested for such an offence and HMRC has since said it will “will not hesitate to act on reports of abuse of the scheme”.  
HMRC has also recently published a factsheet for employers that have overclaimed CJRS grants. It confirms that employers who have overclaimed, for whatever reason, and have not made a repayment should notify HMRC by the latest of:

• 90 days after receiving the grant they were not entitled to;
• 90 days after a change of circumstances that meant they could not retain a grant; or
• 20 October 2020.

HMRC says that employers that were not aware they had been overpaid when they received the grant or when circumstances changed will not be charged a penalty. However, they will need to repay the amount overpaid.
Where HMRC finds that an employer has received an overpayment, it will assess an Income Tax charge to recover the overpayment. 
This will be equal to the amount overpaid, or not used within a reasonable period to make furlough payments to employees or to cover associated costs. The charge must be repaid within 30 days, after which interest and penalties will apply.
If an overpayment has been received, but HMRC has not made an assessment, employers must detail the overpayment on their Corporation Tax return or Self-Assessment tax return.
Where a company has received an overpayment and the company officers knew of an over claimed CJRS grant when it was received, or another time when a tax liability arose, or they were aware that the grant was not used for its intended purpose, and the repayment cannot be recovered from the company because of insolvency, company officers can be made personally liable for the amount owed.
If an employer fails to notify HMRC within the relevant period, a penalty of up to 100 per cent of the CJRS grant they received but were not entitled to and which they do not repay by the last day of the notification period, will be charged. This means employers could have to pay more than twice the amount of an overpayment in these circumstances.
Deliberate defaulters could also have their details published under the Publishing Details of Deliberate Defaulters (PDDD) policy.
Specific arrangements also apply to partnerships. Partners will be held jointly and severally liable for the overpayment. If HMRC does not issue an assessment, one of the partners will need to include the charge on their 2020-21 Self-Assessment Tax Return.
In light of these findings and HMRC’s tough approach to CJRS errors and fraud, employers must review their use of the scheme and make any necessary repayments now to avoid a potential fine in future. To find out how we can help you assess your CJRS claims, please contact us.