HMRC is sending compliance letters to certain employers about the claims they have made under coronavirus job retention scheme (CJRS). Tax agents should receive a copy of this letter if is sent to their client.
A compliance letter will be triggered where employer has apparently made a claim for ineligible employees, or a claim has been miscalculated. The letters say HMRC may start a formal compliance check if the employer does not respond with the timeframe suggested.
HMRC has said that it will focus on fraudulent claims and not on cases where the employer has made an innocent error. However, the difference between a genuine mistake and an apparent fraud may not be discernible to HMRC without further investigation.
Employers can either tell HMRC about the over-claimed amount on their next claim or, if no further claims are to be made, by contacting HMRC direct.
Where the over-claimed amount has not been repaid the employer must tell HMRC by the latest of:
• 90 days after it receives a CJRS grant it was not entitled to
• 90 days after the day circumstances changed so the employer was no longer entitled to keep the CJRS grant
• 20 October 2020
If the employer doesn’t repay the overpaid grant HMRC may recover it by making a tax assessment for the excess grant. The recovered amount will cover both amounts over claimed or not used to pay furloughed employee wages and associated costs (employer’s NIC and pension where the grant included these). Payment will become due 30 days after the date the assessment is issued. Interest will be charged on late payments. Late payment penalties may also be charged where the amount remains unpaid 31 days after the due date.
If HMRC doesn’t raise an assessment to claw-back the grant then employers must include the details of the overpaid grant on the appropriate corporation tax return or self-assessment return.
There are penalties for submitting an excessive CJRS claim, as set out in Notice CC/FS48. The HMRC press release suggests that penalties will only be sought where HMRC has to take action to collect over claimed amounts.
HMRC has confirmed it will not charge a penalty where an employer did not know they had been overpaid a CJRS grant at the time it was received, or at the time that circumstances changed, meaning that entitlement came to an end or reduced and the overpayment has not been repaid.
There are no penalties for submitting an inaccurate CJRS claim which resulted in a grant that was lower than the employer was entitled to.