Q&A 2: How can employers rectify erroneous furlough claims under the Job Retention Scheme?
We'll periodically be posting questions we come across that we believe may be of wider interest. This question has been paraphrased from a larger article from Croner Taxwise's HR team, with whom we have a partnership for our clients to benefit from premium HR advice.
While the Job retention scheme has been relatively simple to navigate, albeit with increasing complexity since the introduction of "flexible furlough", it is possible that some employers may have made errors within their claims or misinterpreted the rules.
The Government has explained that the following actions constitute an over claimed furlough grant -
a) any amount the employer was not entitled to receive;
b) any amount the employer is no longer entitled to receive after a change in circumstances (i.e furlough payments being claimed afetr employees has returned to work)
HMRC are primary concerned with non-compliance with the scheme and as such the rectification of innocent errors should not result in an penalty provided...
A) the employer did not know of the over payment at the time it was received, or at the time that their circumstances changed, and
B) if it is repaid within the following time period:
12 months from when their accounting period ends to rectify errors
until 31 January 2022 for sole traders/partners
NOTE - Although errors can be rectified it is also essential that they are reported so as to avoid penalties such as
income tax charge – full over claimed amounts may be recovered if HMRC make a tax assessment for the amount over claimed, of which payment of the assessed amount will be due 30 days after the assessment (otherwise interest will be charged on the tax from day 31)
company officers can be made personally liable in the cases of insolvency
100% penalty for failing to notify HMRC, within the below notification period
details of employers that deliberately over claim may be published
partners will be jointly and severally liable for any over claimed grants repayable
Notification of any over claimed furlough grant payments need to be made within any of the following notification periods:
90 days after receiving the overclaimed payment
90 days after the day circumstances changed
by 20 October 2020
Employers who have mistakenly over claimed will be given payment reference from HMRC once they have been notified, and will have the opportunity to repay the amount through their next furlough claim, or directly to HMRC if they are no longer claiming any more money under the Job Retention Scheme.
Anyone who believes they need more guidance on this or are worried about the claims they have made should contact our office to discuss further.