Coronavirus Job Retention Scheme claims: disclosing and fixing mistakes with HMRCLexLeyton
The Coronavirus Job Retention Scheme (‘CJRS’) will end on 31st October 2020. Despite recent ‘kite-flying’ suggesting that it may be extended in certain industries, such as events or leisure, that deadline remains hard and is approaching at speed.
The scheme was introduced at an incredible pace, has frequently evolved and is not without its complexities even now. Many employers have struggled in the correct application of the scheme, often resulting in accidental under-/over-claims being made or overpayments or underpayments to employees.
Common problem areas include:
- Claiming for days not worked as part of a ‘claim period’;
- Claiming for days when employees were signed off sick;
- Identifying which areas of pay constituted ‘regular payments’ such as overtime, commission and fees when calculating how much to claim;
- ‘Hangover’ problems caused by the fact that until the 5th of June, it was not possible to correct errors in a previous claim period.
HMRC have made regular noise around perceived abuse of the CJRS. The government has said that up to £3.5bn in CJRS payments may have been fraudulently claimed or paid out in error https://www.bbc.co.uk/news/business-54066815 and arrests have already been made of those suspected of defrauding the UK taxpayer and HMRC.
HMRC has the power to recover amounts of CJRS grants that have been incorrectly claimed. If an employer has inadvertently claimed excessively and fails to notify HMRC of this, penalties may be levied.
The penalties operate on a tiered-system based on knowledge of the error and whether the employer has come forward to report to HMRC or not. If you knew you were not entitled to your grant and did not tell HMRC, that failure will be treated as deliberate and concealed. In that event HRMC has authority to charge a penalty of up to 100% on the amount of the CJRS grant that you were not entitled to receive or keep.
A significant number of employers will have realised that they have made errors in the CJRS claims. Any problems or errors can be identified and there is now a mechanism for correcting them, thereby avoiding any penalties.
In the case of an under-claim, whilst there would be no penalty from HMRC, the employer would have failed make the best use of the available benefits of the scheme – so an opportunity potentially to claim some cash.
If an employer has incorrectly claimed a CJRS grant (and have not repaid it in the case of an overpayment), HMRC must be notified, within the ‘notification period’ which ends on (and is the later of)
- 90 days after the relevant grant was received (if this was in excess of the correct amount);
- 90 days after the date circumstances changed so that you were no longer entitled to the CJRS grant; or
- 20th October 2020.
The notification and correction can be submitted the next CJRS claim is being made. Otherwise, the notification of the over-claim must be done separately, via the CJRS portal.
Once the notification is made to HMRC, any amount over- or under-paid will need to be assessed directly by them and remedied if appropriate.
The crucial lesson in all of this is: even if employers feel they have acted correctly, it’s important to consider doing a double check of the historic amounts claimed under the CJRS.
Check your calculations now, and certainly well in advance of the 20th of October.