HM Revenue and Customs (HMRC) has reviewed the payments made under the Coronavirus Job Retention Scheme (CJRS) and estimated that the amount lost due to fraud or error is currently close to 9%1. The guidance issued towards the beginning of the scheme, launched in April 2020, developed over time and was initially unclear, which could have led to some of these errors. The Government has since established the Taxpayer Protection Taskforce to tackle fraudulent and widespread errors in claims.
The Taxpayer Protection Taskforce is made up of 1,265 HMRC staff and will be in place for the 2021/22 current tax year through to the end of the 2022/23 tax year2.
This level of investment in post-payment compliance reflects the confidence HMRC has in recovering amounts overpaid because of fraud and errors.
We are already seeing numerous enquiries raised into suspected overclaims. Due to the complexity of the CJRS support calculations, combined with how fast the CJRS was rolled out, even businesses that had full confidence in the accuracy of their claims have received HMRC enquiry letters.
HMRC has also issued specific, targeted ‘nudge’ letters to several CJRS claimants. These letters are generated where HMRC has identified a potential risk. HMRC has sophisticated data gathering tools and is using real time information submitted as part of monthly payroll reporting to identify these potential risks.
A strict penalty regime was introduced to address fraudulent and inaccurate claims. HMRC wrote to claimants in late 2020 to encourage them to review submitted claims and repay any excessive amounts, resulting in a total repayment of approximately £1.3bn from claimants3. Having provided this opportunity, tough penalties can be imposed should HMRC discover overclaimed amounts arising from an enquiry.
Businesses that have received an HMRC enquiry letter can benefit greatly from a review by employment tax experts, and support in managing the enquiry to a resolution.
Businesses are, however, strongly advised to act ahead of receiving an enquiry from HMRC. A review of your CJRS claims now could avoid a longer, more expensive, process later, even if claims were made in good faith. Should an error or overclaim be identified during a review, we would usually recommend that a voluntary disclosure is made to HMRC.
Businesses that proactively manage their tax affairs and seek to rectify errors without undue delay are considered lower risk by HMRC. A voluntary disclosure could therefore impact the amount of any penalty, or whether it is to be levied at all.
How we can help
We have experts in both employer solutions and tax dispute and resolution. Working together, these experts can review the accuracy of claims for CJRS support and assist with any disclosures that need to be included in your company’s tax returns. If you receive an enquiry letter or nudge letter from HMRC, they can also help you navigate the enquiry or disclosure process to minimise penalties, rectify errors and come to a resolution with HMRC.
Listen to our podcast where Ami Jack Head of National Tax talks to by David Yewdall, from our Employer Solutions team and Clare Halligan, from our tax disputes and resolution team on HMRC enquiries into Coronavirus Job Retention Scheme claims.
For help with your CJRS claims, please get in touch with either
David Yewdall: email@example.com
Clare Halligan: firstname.lastname@example.org
1. Our approach to error and fraud in the COVID-19 support schemes - GOV.UK
3. Businesses give back £1.3 billion in furlough cash - GOV.UK
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
This article was previously published on Smith & Williamson prior to the launch of Evelyn Partners.