Have you overclaimed on furlough grants? Here’s what you should do…

15th September 2020

HMRC are in the process of sending out compliance letters to employers who have overclaimed on furlough grants. Those who claimed under the CJRS (Coronavirus Job Retention Scheme) are being encouraged to review their claims. Have you overclaimed on furlough grants? Here’s what you should do:

The review phase of CJRS

As part of the review phase of the CJRS, HMRC are to send out 3,000 of these compliance letters each week. The reasoning behind this is to encourage employers who have claimed furlough to check their claims, as you may need to repay amounts. It is believed that up to 27,000 businesses will be contacted over the next couple of months.

The letters are now being sent out after a vast rise in the number of furlough fraud reports which have been raised directly to the HMRC.

What will HMRC need to know?

HMRC will be reviewing your claim by asking questions. This is to ensure the validity of the claims, whether the claims have been miscalculated or made for ineligible employees.

In particular, the HMRC will be investigating primarily fraudulent claims for those employers who may have abused the Coronavirus Job Retention Scheme. If you have made innocent, or genuine mistakes when it comes to your claim, there will be no need to worry.

What should you do if you receive a letter from the HMRC?

Regardless of whether you have received a letter or not, it would be wise to go through carefully and review your records and CJRS claims. Whilst conducting your reviews, remember that one of the main conditions of the CRJS claims is that an employee should not have been undertaking any work, whether at home or at work, whilst furloughed.

If you go through your claims and find an error, then you should contact HMRC immediately to avoid penalties and pay back any money that you weren’t entitled to.

What are the deadlines for notifying the HMRC with mistakes?

If you have noticed a mistake in your CJRS grant and need to contact HMRC, the deadlines are as follows;

  • 90 days after the date you received the CJRS grant you weren’t entitled to
  • 90 days after the day circumstances with your employee changed so that you weren’t entitled to keep the CJRS grant; or
  • 20th October 2020.

If these deadlines are missed and you are aware of being overpaid with the CJRS grant, then the law will treat this as deliberate and concealed and you will have to pay penalties of up to 100%. HMRC will then have the power to “name and shame” you by publishing details of deliberate tax defaulters.

However, you only need to worry if you have overclaimed the CJRS grant and haven’t notified the HMRC by the deadline. For those that do notify in time, you will just need to repay the money which you weren’t entitled to.

Further information regarding the CJRS claim

You can find a factsheet on the HMRC’s website which lay out the penalties for receiving grants you weren’t entitled to. The fact sheet will also outline:

  • Deadlines for the amounts you have overclaims
  • How you pay the money back
  • When you have to pay the penalties

It’s best to go through your claims now, to avoid penalties. Whether or not you receive a letter, go through your CJRS claim now and undertake reasonable due diligence to make sure you don’t get caught out!

If you need further assistance in this matter, then feel free to get in touch with us here at Purple HR.

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