HMRC letters worry Business Owners…

We’ve mentioned already that HMRC are going to be looking into claims made under the Furlough Scheme, most recently when Jim Harra appeared before the Public Accounts Committee. During that appearance, HMRC explained that they believe 5-10% of claims made under the scheme were wrong or fraudulent.

HMRC has identified 27,000 CJRS claims where something looks wrong, and it is initially enquiring into 11,000 of those claims. This activity has prompted a flurry of letters to go from HMRC to business owners, that are both vague and worrying.

HMRC has selected employers to contact, and is asking them to review their claims under the Coronavirus Job Retention Scheme (CJRS) or Furlough Scheme.

That’s fine, and to be expected, BUT:

  • There is no information to explain what they feel may be wrong with the claim
  • There is no indication of which month they are concerned with.

What does the letter say?

Business owners are told that there appears to be an incorrect claim, which may have arisen because ineligible employees were included, or because too much was claimed for some other reason. There is no additional detail to give employers a starting point for their review.

The only way to find the potential error, or errors, is to go through every claim in detail and recheck every calculation.

Could the ‘error’ actually be correct?

Yes! There were cases where employees could be furloughed and be claimed for, who weren’t on the payroll in February and March. These may not have been picked up by the HMRC system, and should be the first things to look for. Examples include:

  • transferred from another employer under TUPE
  • transferred from another PAYE scheme as a result of a scheme reorganisation
  • returned from parental leave

What happens next?

The letters ask Employers to respond by phone if they think the claim was correct. This alone is a challenge, as HMRC lines have been inundated since March, and any call is likely to take some time.

Sadly, the system for processing CJRS investigations isn’t up and running yet, and is some weeks away. This is despite the letter from HMRC demanding a response by 22nd September to avoid penalties.

Our recommendation would be to make contact with HMRC, and keep all the details of the conversation, including the name of the person you speak to, and as much information as possible around the date, time and duration of the call.

What if there IS an error?

The HMRC letter asks the employers to email details of any incorrect claims, but until 20th October errors can be corrected voluntarily rather than through a formal disclosure, as we outlined before.

In this situation, as long as it is corrected before the deadline, we would suggest that employers send the email to HMRC as requested, but outline what they have already done to correct the issue. Again, keep all details carefully.

 

We should receive copies of all client correspondence from HMRC, but it doesn’t always work that way! If you receive anything from them and are a client, please email us a copy over as soon as possible. We’ll be able to take a look and advise you from there.

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