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.
Numerous fraudulent CJRS claims identified
HMRC’s CJRS fraud reporting portal had received over 2,000 reports of wrongful claims.
Examples of such wrongful claims include;
- 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.
HMRC also 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.
Rob Case is Partner and Head of Tax and if you have any queries or concerns about anything in this article, you can contact his team on email@example.com or call 01242 776000. See our Tax Service page for more information about our range of services.