HMRC cracks down on Coronavirus Job Retention Scheme overclaims

HMRC is re-examining claims for business support to recover excessive and fraudulent payments with the Coronavirus Job Retention Scheme (CJRS) a particular focus.

The UK Government provided an extraordinary level of financial support to businesses affected by the COVID-19 pandemic. As its focus turns to economic recovery and paying down the record level of national debt, HMRC is re-examining claims for support to recover excessive and fraudulent payments. The Coronavirus Job Retention Scheme (CJRS) is a particular focus for HMRC, which is actively investigating companies and issuing severe penalties for overclaims.

The Taxpayer Protection Taskforce

The UK Government recently announced the launch of the Taxpayer Protection Taskforce, a team focused on identifying CJRS fraud and investigating inaccurate and excessive claims from businesses over the past year. There is significant weight behind this initiative, which has received £100 million in funding from HM Treasury. The taskforce is expected to recover a high level of tax revenue from large businesses within the UK.

We are already seeing numerous enquiries raised into suspected overclaims, and HMRC has issued specific, targeted enquiry letters to several CJRS claimants. Due to the complexity of the CJRS support calculations, even businesses that had full confidence in the accuracy of their claims and believed they did not require any review have been investigated by HMRC. HMRC uses data analysis to identify errors in CJRS claims and launch enquiries. Businesses under investigation could benefit greatly from a review by an employment tax expert, and gain support in dealing with such enquiries.

A strict penalty regime has been put in place to address fraudulent and inaccurate claims. HMRC wrote to claimants in late 2020 to encourage them to review the support they received and provided them with an opportunity to disclose and repay any excessive claims. Having provided this opportunity, tough penalties will be imposed if HMRC discovers overclaimed amounts. Businesses are strongly advised to review the accuracy of their CJRS claims, even if their claims were made in good faith of their accuracy.

Additional disclosures in tax returns

In addition to investigating CJRS claims, HMRC has introduced a new requirement to include details of CJRS payments and other COVID-19 support scheme receipts in corporation tax returns. This includes support received under the Eat Out to Help Out scheme. For all corporation tax returns submitted from 1 April 2021, companies must disclose:

• the amount received in relation to these schemes; and
• the amount they were entitled to receive under these schemes.

By signing the corporation tax return to confirm its accuracy, the company is also confirming that these COVID-19 support scheme figures are correct and can be supported if challenged by HMRC.

How we can help

Our Employer Solutions team can review claims for CJRS support to verify their accuracy and assist with the support scheme disclosures to be included in your company’s tax returns. For companies with claims under investigation, our team can help you navigate the enquiry process to minimise penalties, rectify errors, and come to a resolution with HMRC. For help with your CJRS claims, please get in touch with your usual Smith & Williamson contact, or our Employer Solutions team.

Tax legislation is that prevailing at the time, is subject to change without notice and depends on individual circumstances. Clients should always seek appropriate tax advice before making decisions. HMRC Tax Year 2022/23.

DISCLAIMER
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. This briefing does not constitute advice nor a recommendation relating to the acquisition or disposal of investments. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.

National Tax: NTGH6082181