As we pass the middle of July 2021 – the seventeenth month of the Coronavirus Job Retention Scheme (CJRS) – the amount that can be claimed by employers through the scheme drops to 70% of employees’ usual wages. Employers will be required to top up the remaining 10%.
In August the claim percentage will drop further to 60% and remain at this level until the end of September, when the scheme finally comes to an end. However, from HMRC perspective, this is when their work begins.
By March 2021, HMRC had already opened 7,384 investigations into organisations for their use of the furlough scheme. In addition, by 16 June 2021, HMRC had received over 28,000 reports from workers over potentially fraudulent claims made by their employers.
These statistics show why the Treasury announced £100 million worth of funding to HMRC to tackle fraudulent claims and errors, including a 1,250-person taskforce.
The number of enquiries opened by HMRC will continue to increase and will likely last a number of years. Over the next few months, HMRC’s activity will filter down from those who have acted fraudulently to those who have made innocent errors.
While the majority of employers have acted faithfully, HMRC are well within their rights to challenge any employer who has accidentally overclaimed through the furlough scheme.
HMRC will be looking to claw back any amounts that shouldn’t have been paid, regardless of why the errors have arisen. From our experiences with clients, we have seen overclaimed grants for a wide range of reasons, including:
As we move into the final stages of the scheme, employers may be tempted to move on and put prior claims to the back of their minds. However, it is important that employers are confident no errors have been made or identify any errors that were made.
Strictly, to avoid any penalties, employers must notify HMRC of any overclaims within:
Employers who miss this deadline are more likely to face reduced penalties, or avoid them altogether, if they identify their own errors and voluntarily repay overclaimed amounts through HMRC’s online facility. Coming forward to make a disclosure unprompted by HMRC will always lead to a more favourable penalty position.
Not coming forward is automatically deemed to be ‘deliberate and concealed’ behaviour, irrespective of the actual behaviour, meaning that a penalty of up to 100% of the repayable grant can be levied, effectively doubling the payment to HMRC. Any employer with something to disclose, or facing a penalty challenge from HMRC, should seek appropriate specialist advice.
Our experiences so far are that, despite best efforts during the midst of the pandemic and evolving guidance, innocent errors leading to overclaims are common. We have worked with a number of clients to review their claims, agree the quantum of overclaims and repay them to HMRC.
If you would like assistance in checking your claims, or even help contacting HMRC to notify them of an error from a previous claim, Crowe can assist.
Our Tax Resolutions team can also provide specialist expertise on mitigating and minimising any penalties as well as on the options when determining the best disclosure route to use when approaching HMRC.
Please get in touch with your usual Crowe contact if you would like any assistance.
Crowe Cast: What you need to know about IR35
Return to Office and Hybrid Working
2021/22 P11Ds and PSAs: Deadlines for submission