We knew it was coming, but HMRC have just announced the penalties that they have the power to impose for employers who overclaim for furloughed workers under the Coronavirus Job Retention Scheme (CJRS). So, its been a while (as I have been swamped with work), but this type of news is sure to get me back into the blogging saddle…
Overclaims under the CJRS relate to both amounts you never should have claimed in the first place but also (interestingly) to amounts that you have claimed and due to a change in circumstances, you no longer are eligible to keep hold of them – so it’s a wide remit and I will again urge you to keep detailed records of your employees on furlough, in particular as you start to bring employees back using the new flexible furlough scheme.
The first rumblings came of this last month, when HMRC inserted a innocent looking tick box on the online claim form. This box was for you to select if you had overclaimed and needed to repay monies to the Revenue – they would deduct it from the next payment due to you under the CJRS – simple! But we knew there would be enforcement action following that, and here it is.
First, let’s start with the good news I think – The Revenue will not be proactively searching out non-compliance, but will work on the anonymous reports they receive about alleged non-compliance and overclaiming. We expect the approach to be a sensible one i.e. if it was a genuine mistake then you are unlikely to be issued with a penalty, just ordered to repay the overclaim. However, as always the difficulty will be in proving that it was a genuine mistake that you were unaware of. There is also another bit of good news in that it seems you have 12 months in order to pay the overclaim back – so quite a while, to get your ducks in a row, meaning that compliance action wont take effect until March next year earliest.
If you suspect and identify an overclaim you first need to notify HMRC and you have until the latest of:
1. 90 days after the incorrect claim
2. 90 days after circumstances claim meaning you are no longer entitled to those monies
3. 20 October 2020
If HMRC do assess you and identify an overclaim, they will write to you and tell you the amount and the reasons for it – you then have 30 days to pay up before interest is added. If you are concerned it isn’t accurate, you can challenge it but I would urge taking specialist advice. My colleague Laura Parr at Smith Cooper is an ex-HMRC Inspector and specialises in this type of think – she is your lady, so if you need her details just contact me!
Ultimately if HMRC decide you intentionally or knowingly overclaimed they can also issue a penalty of up to 100% of the amount of the overclaim, payable to them on top of repayment of the overclaim AND you will be “named and shamed”.
So, what is the morale of the story – keep records, keep things under review, make sure your records are regularly looked at and kept up to date as things do and will change, particularly with flexible furlough, and finally if you suspect you have overclaimed then you MUST notify HMRC.
Provided you do it right you don’t have anything to be concerned about, so its business as usual!