Imminent Deadline for incorrect Furlough claims!
Self-employed individuals and employers have until 20th October to inform HMRC that they’ve over-claimed the Self Employed Income Support Scheme (SEISS) or Coronavirus Job Retention Scheme (CJRS) grants and repay any excess before penalties apply.
When the draft legislation was proposed for taxing the coronavirus support payments (SEISS, CJRS and SSP reclaims), it included a 30-day period for taxpayers to notify HMRC of corrections needed to any of those claims. This notification period was then extended to 90 days.
If the taxpayer notifies HMRC by the 90th day after the claim was submitted, no penalty will be imposed.
If the taxpayer does not repay HMRC the amount of coronavirus support payment overclaimed, HMRC will raise an assessment of tax equal to the overclaim. This assessment can be appealed.
Where the taxpayer fails to notify HMRC of the overclaimed coronavirus support payment within the 90-day period HMRC will impose a penalty under the ‘failure to notify’ rules.
The penalty is calculated at 30% to 100% of the overclaimed amount, for an unprompted disclosure, but will be set at 50% to 100% of the overclaimed amount for a prompted disclosure.
A taxpayer who is investigated by HMRC and is found to have incorrectly claimed a CJRS or SEISS grant will therefore have to repay 150% to 200% of those funds.
The majority of over-claims will have arisen through genuine errors. The guidance has been complex, and issued at a time when business owners were under extreme pressure.
We would hope that HMRC will therefore show some understanding when implementing these penalties, but until they start to feed through the system, we can’t be sure whether that will be the case.
If you’re worried about your claims, you have until the 20th October to review those that you’ve made.
If you’d like our help in doing so, please get in touch as a matter of urgency.