The reasons given for the possible repayment are that businesses have claimed for greater sums of money than their entitlement or that they have not met the requirements of the scheme.
Most of these claims will have been made honestly, with HMRC acknowledging ‘mistakes happen’. However there are some who will have claimed fraudulently. We are encouraging businesses to review their records and ensure any claims made are valid. If you have received one of these letters then you should contact HMRC even if you don’t believe you have over-claimed.
HMRC is offering a limited time amnesty until 20 October 2020, whereby businesses in breach of the rules should contact them and repay any amount they weren’t entitled to. During this amnesty period employers won’t be sanctioned or receive a penalty but they should act quickly to assess their records and claims in order to meet the deadline. Typical problems cited by HMRC include:
- Furloughed employees carrying out work duties, and
- Claims being made in respect of employees who have left employment
Either could mean there is no longer entitlement to some of the support claimed and repayment may be due.
There is scope for employers to suffer both severe treatment by HMRC and reputational damage if that are seen to be abusing support measures. HMRC can impose a 100% income tax charge to businesses who they find to be ‘not entitled’ to CJRS payments, regardless as to whether the overclaim was deliberate or a mistake.
If a breach is deemed deliberate and employers do not correct this during the amnesty period, then sanctions and penalties will be severe. In extreme cases HMRC can use its criminal prosecution powers as well as ‘naming and shaming’ any non-compliant business.
So don’t ignore it and don’t wing it – get professional help if you receive a letter but it is also advisable to go back and check your claim and records regardless of whether you receive the letter or not.
To discuss how this applies to your circumstances please contact Graham Boar or your usual UHY adviser.
