Look out for HMRC’s online scrutiny - July 20th 2023

Although the coronavirus job retention scheme (CJRS) ended on 30 September 2021, a recent case involving a CJRS claim shows the scope of HMRC’s data gathering. It is a reminder to taxpayers that HMRC’s investigative methods continue to evolve.

Claims under the CJRS could be made in respect of furloughed employees who had ceased all work. When it came to directors, they were permitted to carry out their statutory duties without this being classed as working.

Working or not?

A director of Glo-Ball Group Ltd was paid nearly £3,500 under the CJRS. Although the director did no work as such while furloughed, they continued to update the company’s Facebook account.

In the case heard by the First-Tier Tribunal, HMRC successfully argued that this constituted working and the CJRS claim was denied, even though the director only took a few minutes each month on the updating. Just one piece of work would have been sufficient to invalidate the claim, regardless of whether that work actually generated any income.

A warning

HMRC’s investigation of information on Facebook accounts, blogs and other social networking sites could impact taxpayers in various ways. For example:

• An undeclared trade or property rental could easily be uncovered by HMRC from online adverts.
• Postings showing an expensive lifestyle could prompt a compliance check from HMRC if the lifestyle is not backed up by the level of income declared on tax returns.

HMRC normally only looks at internet data which is available to everyone, not data where privacy settings have been applied.

Consultation

HMRC, not surprisingly, is keen to increase the amount of data it gathers. A recent consultation addressed HMRC’s current data weaknesses in several areas. Although many of the suggestions are not going to be taken forward for the time being, the government intends to implement some changes where data is already held by taxpayers:

• Hours worked by employees will be collected via real time information PAYE reporting (this will only be required where the hours worked are reasonably stable, so not for zero hours contracts)
• Dividends paid to owner-managers will be separated out from other dividends on the self-assessment tax return (HMRC currently does not know the source of dividends received).
• The start and end dates of self-employment will be made mandatory (this information is currently optional on the self-assessment tax return).