CJRS – HMRC enforcement in the event of overpayments
Whilst the furlough scheme has undoubtedly helped many businesses and workers, reports of abuse of the scheme by some are coming to light. HMRC has also started taking steps to enforce compliance including by pursing arrests for those abusing the scheme.
On 28th July the government published guidance for employers setting out what they should do if they have claimed too much (or little) through the scheme. HMRC have also issued a fact sheet on when penalties may be charged in relation to overpayments made. The key points of note are:
- Employers who have made an error can delete a claim within 72 hours of making it.
- If you realise you have made an error after 72 hours and have claimed too much, you will have to pay it back. Employers can advise HMRC of an error as part of their next claim, which will then be reduced. A record of the adjustment should also be kept for six years. If you are not making any further claims, you will need to contact HMRC to make the repayment.
- Employers must notify HMRC of any errors by the latest of (1) 90 days of the incorrect claim being made; (2) 90 days of the date on which circumstances changed and the claim was therefore incorrect; or (3) 20th October 2020. Failure to notify HMRC about any overpayments that you are aware of within the notification period may result in penalties up to an amount equal to 100% of the over-claimed amount.
- HMRC may recover any amounts claimed by employers which they were not entitled to and did not repay by making a tax assessment, including any amounts that were not used to pay furloughed employees’ wages and costs within a reasonable period. Payment is due within 30 days, after which interest and penalties can be incurred.
- When determining how much a penalty will be, HMRC will take into account the employer’s knowledge of the overpayment and could charge a penalty equal to up to 100% of the amount overpaid. Company officers who knew of the overpayment could be made personally liable in circumstances where the company is insolvent and the amount cannot otherwise be recovered. Similarly, partners may be found to be jointly and severally liable.
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