Readers who may have inadvertently over-claimed grants, the furlough scheme for example, should remedy the situation before HMRC start pro-actively investigating claims.
The Finance Act 2020, contains an amnesty for notifying HMRC of any errors or overclaims within 90 days of the later of:
- any tax charge being payable due to the overclaim and
- the date of Royal Assent of the Act.
As such, the earliest date this amnesty will expire will be 20 October 2020.
Businesses that have made claims – predominantly the furlough scheme – should check claims made and correct any errors within the time limits of this amnesty For example, issues that may have created over-claims are:
- not being aware that remote staff are working, e.g. work-related emails being generated or line managers asking furloughed staff to carry out some work,
- technical or computational issues – innocent errors such as where there is misunderstanding of the methods of certain calculations will not be targeted,
- delays in making payment to staff for the wages due from the furlough grants,
- deliberate fraudulent behaviour.
This amnesty will be the only chance employers have to remedy their position without any penalties being charged.
Penalties for those who fail to notify HMRC within the ‘amnesty’ period but knowingly received the CJRS grant or overclaimed the grant even though they were not entitled to claim it due to any changes in their circumstances will be based on ‘deliberate and concealed’ behaviour. This could potentially make the client liable to a penalty of 100%.
HMRC will also expect to see documentary evidence of furlough arrangements made with staff and other justifications for making claims. These would include an outline of why businesses consider their firm was or continues to be adversely affected by the coronavirus disruption.