Act now on furlough errors
HMRC will be seeking to recover all wrongly claimed furlough payment grants. However, employers who have made innocent mistakes in their claims have been given time to rectify their errors. When must you act by? Lauren Herbert provides the very latest advice.
Thousands of employers applied for furlough payment grants under the Coronavirus Job Retention Scheme (CJRS) which was set up very quickly in March 2020.
At that time, HMRC recognised that the CJRS was potentially open to abuse but they decided not to challenge claims initially so that honest employers were not penalised.
The CJRS is now in the process of being wound down and will close on the 31st October 2020. HMRC has also confirmed what steps it will be taking to recover furlough grant payments that have been wrongly claimed.
As well as seeking to recover wrongly claimed monies and imposing stiff financial penalties on employers, HMRC will name and shame deliberate defrauders. At the same time, HMRC acknowledges that due to the complexity and repeated changes to the CJRS, many honest employers have made innocent mistakes.
If you’ve made an error and are still claiming furlough payment grants, either because you’ve got employees who are fully furloughed or furloughed on a flexible basis, that earlier mistake can be corrected when you submit your next CJRS claim. You don’t have to contact HMRC.
If you’re no longer claiming furlough payment grants and have previously made an error, you must notify HMRC within the notification period.
The notification period ends on the latest of:
– 90 days after you receive the CJRS grants you were not entitled to
– 90 days after the day circumstances changed so that you were no longer entitled to keep the CJRS grant
– 20th October 2020.
Our advice is to act now and don’t leave the rectification of errors to the last minute, it’s far better to act now and liaise with HMRC if necessary. If a third party has been making furlough claims on your behalf, e.g. your accountant or payroll services provider, instruct them to rectify any known errors immediately. Ultimately, these errors will be your responsibility.
Even if you don’t think that you’ve made any errors, it’s worth conducting a full check of all furlough claims made. If HMRC audits your organisation you can show that you double checked claims to the best of your ability before the cut-off date.
If HMRC later determines that your CJRS calculations were incorrect, it is likely to be more lenient if you can show that you used a reasonable approach in assessing and calculating your claims. Keep a record of your original CJRS claims (along with all correspondence), your subsequent review checks and the actual calculations that you applied during the initial and review processes for a minimum of six years.
If you’re still claiming furlough payments, previous errors can be corrected in your next claim. If not, you must notify HMRC about any errors by the end of the notification period. This ends on the latest of 90 days after the error occurred or 20th October 2020. It’s worth reviewing all furlough claims made, even if you believe they are correct.