The Job Retention Scheme has assisted 9.6 million jobs with over 1.2 million employers have made furlough grant claims.
Whilst on furlough, employees are not permitted to work, originally for a period of 21 days, whilst receiving furlough pay. Tax payers, is the government grants, funded 80% of earnings plus employers NIC and a base minimum employer pension contribution. All of the earnings related grant was required to be paid to the furloughed employee.
HMRC have identifies nearly 30,000 employers with claims that do not add up and there is something wrong.
So at a rate of 3,000 letters a week over a 10 week period, those employers are formally being contacted.
The HMRC records indicate that for CJRS grants paid out, the employer may need to make corrections and repay some or even all of the grant received.
There are two main areas being identified as showing discrepancy:
- The employer has claimed grant which is more than they are entitled compared with data HMRC hold
- The conditions of qualifying for the scheme have not been met – for example, claims have been made for some individuals who do not meet qualifying conditions
Don’t ignore the letter
If an employer receives a letter, there is a potential problem and the employer must take action.
They must review their records such as pay and FPS submissions and the CJRS grant claim.
HMRC accept that mistakes do happen – and have made it easy to correct a claim and voluntary repay any overpayment of grant. If utilised then the employer will not be charged a penalty.
The employer must contact HMRC whether they locate an error or consider that the claim was accurate and correctly claimed.
The employer must respond to HMRC if you receive the letter
If the claim was not correct and a payment is required, the employer must email a specific HMRC team who will then make contact the employer and assist with the making of a formal disclosure and pay over amounts due for repayment.
The email which must be from a business email account must indicate:
- The employers PAYE reference
- The CJRS grant cLiam period being disclosed
If the employer believes their claim is correct and there is no mistake, then they are required to call a special contact number
What if the employer ignores the letter and does not respond?
HMRC provide a response deadline. If no response is received, they may start a formal compliance check.
HMRC state that they are supporting employers whilst tackling serious fraud and criminal activity. They understand that mistakes happen in what have been challenging times, and will not seek out innocent errors or small mistakes by taking compliance action.
What about our tax advice agent?
Employers are advised to inform their registered and authorised agent details of any letter received. Agents associated with employers considered to have errors, will receive a similar letter contact.
What if I don’t know if there is an error or not?
If after checking guidance and claim and payment data the employer remains unsure whether their CJRS claim was correct, then the special HMRC contact number is to be called, and HMRC will assist.
The Coronavirus Job Retention Scheme was created to help employers pay wages under very difficult and unique circumstances of COVID19.
However, some organised themselves to exploit the system. Arrests for fraudulent claims have already taken place.
Other breaches may be more akin to misunderstandings of the Scheme or desperation for survival as opposed to outright fraud.
Now that the Scheme is tailing to its closure, it’s time for the checks and balances to take place. If a mistake has been made – correct it.
DO NOT IGNORE THE HMRC LETTER