Employment News

News added on 01.09.2020

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Coronavirus

Letters being sent to employers who have overclaimed furlough grants

HMRC has issued a first set of compliance letters, urging employers it believes may have claimed too much under the Coronavirus Job Retention Scheme (CJRS) to review their claims. Is this something you need to worry about?

HMRC is to issue 3,000 of these compliance letters each week as part of the review phase of the CJRS, to advise employers that they may need to repay amounts received under the scheme, and it has forecast that it will contact approximately 27,000 businesses in total over the course of the next couple of months. HMRC will be asking questions where it has concerns over the validity of claims made. This could be because claims have been miscalculated, or claims were made for ineligible employees. However, the compliance activity will be focusing in particular on potentially fraudulent claims and those employers who have abused the CJRS, not on cases where employers have made genuine or innocent errors. These letters come after a steep rise in the number of furlough fraud reports being made to HMRC.

In the meantime, whether or not you have received one of these letters, you should carefully review your records and your CJRS claims, taking into account that one of the main conditions of the CJRS is that employees should not have been undertaking any work for you, even from home, while they were furloughed. If you become aware of an error in your CJRS claims, to avoid penalties you should contact HMRC as a matter of urgency and then pay back any money you received that you weren’t entitled to. The deadline for notifying HMRC that you have overclaimed a CJRS grant is the later of:

  • 90 days after the date you received the CJRS grant you weren’t entitled to
  • 90 days after the day circumstances changed so that you were no longer entitled to keep the CJRS grant; or
  • 20 October 2020.

HMRC has also produced a short factsheet setting out the penalties for receiving grants you weren’t entitled to under the CJRS. If you don’t notify HMRC within the notification period set out above, and you knew that you had been overpaid the CJRS grant at the time you received it, or you knew that you had stopped being entitled to it when your circumstances changed, the law then treats your failure as deliberate and concealed and you will be liable to a penalty of up to 100%. You also then face being “named and shamed” under HMRC's powers to publish details of deliberate tax defaulters.

You only need to worry if you’ve overclaimed a CJRS grant which you don’t then notify to HMRC by the deadline. If you have overclaimed, you’ll need to repay the money that you weren’t entitled to. Undertake reasonable due diligence now to ensure that you’ve complied with the rules of the CJRS, whether or not you’ve received one of these letters.

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