Time running out to correct CJRS claims penalty-free
Employers that claimed for the wages of furloughed employees through the Coronavirus Job Retention Scheme (CJRS) have until 20 October 2020 to correct any errors, or 90 days from the date of the claim if that is later than 20 October 2020.
Those that fail to meet these deadlines risk penalties, further compliance action or even criminal proceedings from HM Revenue & Customs (HMRC) in respect of errors, mistakes and overclaims that they may have made since the scheme was launched in April.
Corrections made before these dates will not attract a financial penalty, but any amounts which HMRC later finds to have been claimed in error will be subject to financial penalties starting at 50% of the amount overclaimed.
HMRC has now started writing to employers to tell them that they have grounds for concern over their CJRS claims and inviting them to amend and correct those claims. Initially, 3,000 employers have been contacted, but HMRC has stated publicly that they are currently considering some 27,000 claims they consider to be “high risk”. Any employer in receipt of such a letter should ensure that, after taking appropriate advice, they respond to HMRC even if they believe all claims to be accurate.
There has been considerable media attention on suggestions that large numbers of employers have acted “fraudulently” by making claims in respect of employees who continued to work whilst claiming furlough. Whilst in our view such instances are not widespread employers should satisfy themselves that claims made by their organisation have been correct.
At the outset of the CJRS, there was considerable ambiguity about exactly what employers could claim for, coupled with regularly changing guidance that has now been updated 23 times since March.
A business may well have made a claim based on guidance published at that time, but with hindsight and the benefit of more recent HMRC material, there are now grounds to reconsider that claim.
One area which may have proven tricky for employers in the early days of the scheme was whether to include tips including those distributed through troncs, discretionary bonuses and discretionary commission payments in calculating an employee’s usual wage.
If you believe that you have received a CJRS overpayment, please contact us for advice in the first instance.
If you will be making another claim before the relevant deadline, you can correct an overpayment as part of the claim and, in effect, offset the overpayment against the value of the new claim.
However, if you are not making a new claim before the relevant deadline, you will need to obtain a payment reference number from HMRC to repay the amount overclaimed by online or telephone banking, CHAPS or Bacs.
If you repay any overclaimed grants by the relevant deadline, this will prevent any potential tax liability arising in respect of the overpaid amount.