For example, during and following the pandemic, HMRC put a huge amount of resource into facilitating and then investigating furlough claims to identify both incorrect and fraudulent activity. This included recovering amounts that were overclaimed because of simple errors, or where the guidance and method of calculation had not been followed properly. The HMRC guidance on the Coronavirus Job Retention Scheme (CJRS) could be complex and changed almost daily in some periods, so it will not be surprising to learn that many innocent errors were made by employers.
A recent House of Commons committee report looked into HMRC’s involvement in employment support schemes related to COVID. The report said that the HMRC task force had not recovered as much as had been predicted, and that changes were needed to improve recovery. The report stated that the position needed to be carefully monitored in the future to measure its success.
One of the reasons for the lack of success cited by HMRC is that “it is hard for their compliance teams to prove, after the event, that employers were claiming furlough for employees still working, particularly if they were only furloughed part-time”.
Please don’t think that this will put off HMRC checking and recovering overpaid CJRS claims simply because it might be difficult to prove. HMRC are still looking at these.
In fact, one area where we have seen a significant increase in HMRC activity is in traditional HMRC Employer compliance reviews, or as they are sometimes (mistakenly) called 'PAYE Inspections'. Checking payroll calculations is a small, albeit important, part of the process these days.
Although some HMRC resources are being returned to their normal roles, it is unlikely that HMRC will ignore any CJRS claims you made. The necessary CJRS checks and investigations will also be incorporated in the wider ranging employment tax reviews that HMRC routinely undertake. Any errors will have to be rectified.
HMRC can also impose interest and penalties where they find errors on CJRS claims requiring repayment to the Treasury, these can add significantly to the cost of repayment. HMRC have said they will not penalise innocent mistakes.
Our advice is to make sure you are prepared for this by going back over your claims to make sure they are accurate, and in accordance with the HMRC rules and guidance at the time.
If you discover errors leading to overclaims, you will need to disclose this to HMRC and make the necessary repayment. We recommend taking professional advice from your tax advisers if you do discover errors when checking the position.
At Crowe, we have helped many employers to rectify these overpayments and we have significant experience in disclosing and negotiating with HMRC to achieve the best result. We are always happy to provide advice and assistance in these matters.