Furlough Scheme Overclaim Penalties

HMRC has issued new guidance around the Coronavirus Job Retention Scheme, or Furlough Scheme, that deals with the recovery of amounts claimed incorrectly, and the penalties that can be charged.

The new factsheet defines an overclaimed grant under the scheme as follows:

‘An overclaimed CJRS grant includes any amount of a grant which:

• you were not entitled to receive
• you were no longer entitled to keep after your circumstances changed – for example, if you continued to receive a CJRS grant for an employee after they left your employment

When we talk about ‘you’ in the factsheet, this can mean an individual, a partner or a company.’

If you have overclaimed…

If you know that you have claimed more than you should have done under the scheme, you can tell HMRC about the overclaimed amount in your next claim, and adjust the amount accordingly. In this case, you do not have to contact HMRC separately to let them know.

If you will not be making further claims, you’ll need to let HMRC know that you’ve made an error, and should visit this page to find out how to repay the amount.

What will HMRC be looking for?

The new legislation allows HMRC to look for incorrect claims and recover those amounts. Their priorities are ‘supporting our customers and tackling deliberate non-compliance and criminal attacks’. The factsheet issued says that they will not be actively looking for ‘innocent errors’.

No penalty will be charged if you were unaware of the over claim:

• at the time you received it
• when you stop being entitled to it
• AND you paid it back in the relevant time period (see below)

What is the relevant time period?

• For sole traders and partnerships – 31st January 2022.
• Limited Companies – 12 months from the end of your accounting period.

What is a Notification Period?

If you need to let HMRC know about an over claim that you’ve already received, you must do so before the notification period ends. There are differing end dates that will apply to different situations, as follows:

• 90 days after the claim is paid.
• 90 days after the circumstances changed that mean that you are no longer entitled to the payment from the claim.

What happens if HMRC identify an overclaim?

• HMRC will assess the amount you were not entitled to and have not repaid.
• The assessment must be paid within 30 days, and interest will be charged on any late payments.
• Late payment penalties may also be charged after 31 days.

What penalties will apply?

If HMRC identify an overclaim that isn’t advised within the notification period, a penalty may be charged. If it is deemed that you were aware that you were not entitled to the funds claimed, a penalty of up to 100% of the amount claimed can be charged.

If you’re concerned about any of the claims that you’ve made under the scheme to date, please get in touch.

Finally, please make sure that you’re keeping clear and accurate records of all claims made under this or any other Coronavirus support scheme, as HMRC are bound to ask questions around them in the coming months.