Notify HMRC of overclaimed CJRS "furlough" grants within 90 days
The calculation of Coronavirus Job Retention Scheme grants has proven to be complex, particularly as HMRC frequently changed the rules and the method of computation. Consequently, many errors have arisen and need to be corrected. The latest Finance Act requires employers to notify HMRC within 90 days where it turns out that they were not entitled to receive the furlough grants and there is a penalty for failure to notify them.
HMRC has said that it will be lenient in relation to genuine mistakes, and that penalties will be charged only in cases of deliberate non-compliance.
Unfortunately, with such a large-scale scheme that was speedily implemented, there is risk of misunderstanding of the rules or in some cases, fraud. The government estimate £3.5billion has been paid out erroneously and is looking into 27,000 'high-risk' claims!
Examples of such wrongful claims include the following:
- Claiming furlough payments for staff who are continuing to work
- Furloughing staff but asking them to work “voluntarily” on an unpaid basis.
- Claiming furlough payments for “ghost” employees, and those who left employment before 19 March 2020.
- Not passing on the full amount of furlough pay to staff.
- Failing to account for PAYE tax and NIC in relation to furlough payments
Once these wrongful claims come to light, HMRC will charge penalties to the employer and they will even have the power to transfer CJRS penalties to the directors of an insolvent company if their company does not pay them. We therefore suggest that employers should check the accuracy and validity of their CRJS claims as a matter of priority and ensure that any inaccuracies or errors are disclosed to HMRC as quickly as possible. We can of course assist you in checking claims.