Re-writing history - doing the right thing during COVID-19
Justine Riccomini explores some of the dangers lurking on the horizon for employers, advisers and regulatory bodies during the COVID-19 pandemic period and why it is important to abide by the Professional Conduct in Relation to Taxation (PCRT) guidance to safeguard all concerned.
Sad but true
The Government’s announcements have been made with the best of intentions but unfortunately it is the way of the world that there are always people looking to make a fast buck.
ICAS has been made aware of numerous attempts to “scam” the public – possibly the worst of these being approaches targeting returning NHS workers by unsavoury organisations offering them unrealistic financial gains from tax avoidance schemes. HMRC is aware of these and has produced Spotlight 54, and ICAS has flagged this up to the Scottish Government in COVID-19 communications.
HMRC is also aware that unscrupulous individuals are offering assistance with numerous situations such as:
- Scam texts and emails offering financial support during the coronavirus lockdown period;
- Scam texts and emails offering to appeal fines issued for leaving the house more than the permitted number of times in a day;
- Scam texts and emails offering tax refunds during lockdown;
- The common theme is that the scam message claims to be from HMRC and asks the recipient to click on a link or to provide personal data
So how does a business or practitioner work out what is real and what is a scam? The main thing for anyone to do is to take care when reading emails before opening them. The scammers are aware that this is a particularly busy time for business generally, and especially for employers and practitioners as well as payroll bureaux. Agents should be aware that HMRC will never email anyone to ask for personal data and that this information will be requested via the Personal or Business Tax Account only which have secure portals. Professional advisers working with NHS staff and other key workers should ensure that they have communicated with them on this to protect their interests.
Cash flow is king
ICAS is aware that businesses and individuals will be increasingly desperate during the coming months when work slows down or stops altogether and cash flow is king. It is therefore important to remember when speaking to clients that the Job Retention Scheme (JRS) and Self-Employed Individuals Support Scheme (SEISS) are being funded out of taxpayer’s money – perhaps for many years to come – and are not to be manipulated, taken advantage of, or abused. The professional adviser should ensure that they seek the truth in all dealings with clients.
Do clients really qualify for JRS/SEISS?
Professional advisers need to ensure they remain objective at all times and are prepared to question something which doesn’t look or feel right. Whilst it is perfectly natural to want to help a client take full advantage of the assistance packages on offer, at the back of their mind must be the critical question: is the client entitled to this – wholly or in part, or not at all?
Some typical questions
In terms of JRS, ICAS has heard anecdotal evidence of many scenarios – some of the main ones being:
- employers wishing to place directors on payrolls retrospectively who were not on the payroll prior to 28 February;
- employers wanting people they have previously treated as self-employed to be treated as employees and backdating the payroll to suit;
- employers wanting to retrospectively award the directors or other employees retrospective pay rises;
- employers asking if the directors who were extracting income from the business by way of a salary equivalent to the UK Personal Allowance and taking the remaining income by way of a dividend if they can retrospectively convert the dividends back to PAYE income
Clearly, undertaking these actions on behalf of a client or assisting in creating the records which would facilitate these actions would be like trying to re-write history and is unacceptable behaviour in the context of claiming assistance where it is outside the scope of the JRS package rules. Members should be cautious of being drawn into emotionally-driven conversations and keep a clear view of the facts at the forefront.
The ICAS Ethics helpline remains available should members need assistance with ethical issues.
HMRC and the assistance package
As the department tasked with rolling out the assistance packages, HMRC is also tasked with ensuring compliance and it is very much aware that the schemes are potentially open to fraudulent activity. HMRC intends to crack down on any claims which it considers do not fall within the spirit of the schemes and will not look favourably on the perpetrators of such actions. Practitioners should consider all of this from a reputational and regulatory perspective.
ICAS tax team
Are we answering the queries you want to have answered? Please send us your feedback, comments and queries – we will do our best to follow up on these by collating feedback and passing it on to HMRC and by trying to get answers to queries. Contact ICAS tax at firstname.lastname@example.org or via the Tax Forum in CA Connect https://caconnect.icas.com/forums/tax_JMK5L.