If employers make invalid claims under the Coronavirus Job Retention Scheme they will have to repay the amounts over-claimed to HMRC. The taxman has introduced a limited-period amnesty to allow such employers to sort things out. After that they could face tough financial penalties or even prosecution.

The Coronavirus Job Retention Scheme (CJRS) allows employers to claim money from the government for furloughed employees. HM Revenue & Customs are aware that, in some instances, money may have been received that the employers “were not entitled to”. HMRC is now taking action to try to recover such sums. As well as formal investigations, HMRC has begun sending “nudge letters” to up to 3,000 employers each week: asking them to check if they need to repay amounts received under the CJRS. HMRC are mainly looking for deliberately false claims. They “are not going to be actively looking for innocent errors“.

The good news is that HMRC have introduced an amnesty to help employers. There is a 90-day window in which employers can notify HMRC without facing any penalties: although they would have to repay the over-claimed sums (even in cases of innocent error). The deadlines are: 90 days after the date you received the grant you were not entitled to; or, at the latest, 20 October 2020.

Typical reasons for errors include: employers not being aware that some staff have continued working (especially from home); some local managers may have encouraged staff to continue working (despite head office advice); simple calculation errors. Some employers may have been “cheeky”, and are now regretting making a false claim.

Employers that do not notify HMRC within the amnesty window could face penalties of up to 100% of the value of the incorrect claim (plus having to pay back the over claimed amount). Where the errors were deliberate and the amount involved exceeds £25,000, then the employer’s details could be published as part of the “naming and shaming” policy. In some cases, HMRC could choose to prosecute. Indeed, as early as July this year the taxman arrested 11 people in the West Midlands in relation to a suspected CJRS fraud. And HMRC has a furlough fraud reporting hotline, which so far has had 7,000 calls alleging CJRS abuse. No penalties will be charged if you did not know you had been overpaid the CJRS grant, either: at the time you received it; or at the time that circumstances changed meaning that you stopped being entitled to it – but only if you have repaid it within the relevant time period.

What does this mean for me?
If you are an employer who has claimed under the CJRS: you should take steps to check that all of the claims are valid. If any errors are spotted, they should be reported to HMRC as soon as possible: preferably prior to 20 October. You will also have to repay the overclaimed grant.

How can Lynam Tax Disclosure Experts Help?
Lynam Tax Specialists have a vast amount of experience in dealing with disclosures to HMRC and investigations by the taxman. We can help review your situation, manage any necessary disclosures, and negotiate around penalties.

For a free initial consultation call today:
Paul Lynam: 0845 643 9997
Andrew Nutbrown: 0771 877 8710