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According the Times, HMRC has rejected more than 30,000 applications for the Coronavirus Job Retention Scheme (better known as the furlough scheme). The taxman is said to believe that many of the applications were fraudulent and refused to accept them. In addition, HMRC has written to more than 3,000 employers to say they may need to repay CJRS money. These letters also draw employers’ attention to the current furlough amnesty. This is a 90-day grace period in which you can make repayments without further penalty.
Hopefully, any claim you will have made for the CJRS will have met the criteria and been accepted. However, if you have misunderstood the rules and mistakenly claimed money that you’re not entitled to, it’s essential you understand how the furlough amnesty works – and act quickly.
Furlough amnesty – how it works
The furlough amnesty will only be of concern if you have overclaimed CJRS money (see our advice on calculating furlough claims). This may happen, for example, if you have continued to claim for an employee who is now no longer working for you.
If you have made an innocent error, you will not be charged a penalty if you did not know of the overpayment when you received it (or at the time your circumstances changed).
However – and this is the important bit – you need to notify HMRC of any overclaimed grant payments. You must do this by the latest of these notification periods
- 90 days after receiving a grant you weren’t entitled to
- 90 days after the relevant circumstances changed
- 20 October 2020.
If you notify the taxman within these timescales, then you will need to make repayment within one of these two timescales:
- (Companies) By 12 months from when your accounting period ends
- (Sole traders / partners) by 31 January 2022.
What happens if I don’t notify HMRC?
Don’t risk it! If you don’t notify HMRC, you could face penalties such as these:
- An income tax charge for the full, overclaimed charge – payable within 30 days of an HMRC tax assessment.
- Personal liability of company officers to pay the tax charged, in cases where the company has become insolvent.
- A 100% penalty for failing to notify HMRC within the notification period, explained above.
- Partners being jointly liable for any overclaimed grants.
- The possibility of having your business details published with others that deliberately overclaim.
How do I trigger the furlough amnesty?
Get in touch with HMRC straight away. Increasing number of workers have reported employers for furlough fraud, so make sure you notify the taxman first if you have made any errors.
How can I check I’ve claimed CJRS correctly?
If you are a THP client, we would be very happy to check your claims are accurate. We have helped many of our clients ensure their claims are correct, so if you are thinking of switching to a more proactive accountancy firm, please get in touch!
About Samantha Rowe
Sam’s title is Operations Manager, but the title itself doesn’t truly convey the variety of what she does for THP. From administrative tasks to payroll, strategic business planning, and office systems and procedures, Sam’s primary skill lies in multitasking.
Sam’s journey began as an office junior with George Nottage (now merged with THP), and she soon learned skills in payroll and bookkeeping, and then gained experience as a PA to the Directors, and as Administration Manager.
At the moment, Auto Enrolment is an area that has a key focus for Sam, and for THP as a whole. “The question I’m asked the most by clients just now is, ‘How will auto enrolment affect me?’ And the answer is, no matter how big or small you are, you will absolutely be affected by the Auto Enrolment regulations. I’d encourage you to start thinking about it now, and to look at your payroll software to make sure you’re ready.”