HMRC Halts Taxpayer Probes As Covid-19 Tests Capacity

London - Britain's tax authority has temporarily suspended compliance inquiries into taxpayers and businesses that are under investigation because of capacity constraints caused by the coronavirus pandemic.

HM Revenue & Customs has written to taxpayers under investigation to instruct them not to ask for information and documents from the tax department or to press for responses to requests that have already been made, advisory firm Blick Rothenberg said Tuesday.

"In some cases, they are suspending inquiries at this difficult time," said Fiona Fernie, tax dispute resolution partner at Blick Rothenberg. "Whilst this may seem to be welcome news, there may be good reasons to press ahead if taxpayers or their businesses are already under enquiry."

HMRC said it is prioritizing work to support businesses and individuals, while continuing to pursue criminals attempting to exploit the COVID-19 pandemic to promote tax avoidance.

"It is right that HMRC does everything possible to protect individuals, businesses and ... the economy during this extremely difficult time. This includes prioritizing work to support businesses and individuals," an HMRC spokesman said. "HMRC will always take tough action against fraudsters who attempt to deprive the U.K. of the public funds the government needs to support the nation at this difficult time."

HMRC is running the government's furlough schemes, whereby the government will foot up to 80% of individual wages — or up to £2,500 ($3,149) — for employees temporarily laid off because of the coronavirus outbreak.

Jim Harra, head of HMRC, has said that the government's coronavirus job retention scheme, or JRS, and the parallel scheme for the self-employed, have significant "fraud risks" associated with them.

"One of HMRC's main weapons against JRS fraud will realistically be tax inquiries and reviews, once the initial coronavirus chaos and confusion has subsided," said Robert Salter, a Blick Rothenberg director specializing in employment tax support for fast-growing businesses.

Salter said businesses need to correctly document and evidence any claims that they make for JRS grants in respect of their furloughed employees, if they wish to avoid any future audit challenges from HMRC in respect of these claims.

"Companies which fail to document their claims under the JRS risk having to refund the money in future, plus potentially interest and penalties and surcharges), if they are unable to defend the amount being claimed today," Salter said.

The decision by HMRC comes after the U.K.'s antitrust regulator suspended two investigations into pharmaceutical companies suspected of illegally colluding on the price of drugs, saying last week that resources had been reallocated to "urgent work" during the coronavirus pandemic.

The Competition and Markets Authority said it put two separate probes into the pharmaceutical industry on hold but that they remain active.

--Additional reporting by Najiyya Budaly. Editing by Alyssa Miller.

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