Coronavirus Job Retention Scheme (CJRS) we all make mistakes
20th October deadline for Dealers to avoid penalties
As anticipated, HM Revenue & Customs (HMRC) have started their review of CJRS claims by contacting around 3,000 employers it believes may have overclaimed and where HMRC believe:
- The business may have claimed more grant than they are entitled to.
- The business may not meet the conditions to receive the grant (e.g. including ineligible employees on a claim).
We have not heard from any Dealers who have received a letter so far. HMRC are asking those businesses contacted to review their CJRS claims and contact HMRC to confirm whether there has been a mistake or not.
But, with the head of HMRC anticipating that c10% of claims being incorrect and with the Government statistics to the end of July showing £6bn of the £31bn total being claimed by the Sector, that could be a bill of £600m for the Sector to the end of July!
With 20% of the total paid out going to the Sector, it is likely that the Sector can expect it’s fair share of interest from HMRC and so should act now to review their claims and make amendments by 20th October to avoid HMRC activity and penalties.
With penalties ranging from 15% to 50% for errors that are negligent and new legislation imposing penalties of 100% where claims are fraudulent proactivity is better than inactivity.
Despite Dealers best efforts to keep up with the changes to the CJRS, we have reviewed a number of claims and seen errors covering:
- Inability to evidence the correct reference pay to ensure employees are correctly paid and CJRS claims maximised
- Use of incorrect reference pay
- Lack of or poor documenting of the furlough consultation and ‘agreements’
- Breaching the daily claim limit caps
- Apportionment on the wrong basis i.e. payroll based on paydays and furlough based on calendar days
- Over and underclaims of NIC, based on pro-rata of total for pay period, not NIC just on furlough pay
- Overclaims of Pension
- SMP above the Statutory Pay incorrectly treated
- Not identifying ‘full’ furlough and ‘flexi-furlough’ from July onwards and so using incorrect claim parameters
- Confusion of overlapping pay and claim periods and amounts able to be recovered
But it is not just about the calculations, with a number of the practical aspects of the furlough scheme impacting on employment rights and employment law, including employee communications, variations to contracts, payments, benefits, treatment of absences like sickness and maternity and in some cases termination of employment Dealers could still face claims from employees and Tribunals.
Having to repay furlough claims with penalties and interest could have a major impact on some Dealers and the strength of their balance sheet or ability to correctly forecast for lenders etc, so there is a lot to think about and large claims to protect. Please get in touch if you have ad hoc queries, want your claims reviewed or, like a number of others already, you want a full CJRS risk review undertaken.
Download a copy of this latest update below or if you have any queries, or would like to discuss your requirements for the next step, please contact:
Employment Tax Director
M: 07718 340634
Head of Motor, Partner
M: 07795 476651