Guidance for recipients of a HMRC CJRC Correction letter
Since it launched in April, the Coronavirus Job Retention Scheme (CJRS), also known as the furlough scheme, has paid out £35bn and has been used by 1.2m employers, enabling 9.6m jobs to be furloughed. Of this, it is thought that the UK may have paid up to £3.5bn (10%) on fraudulent or mistaken claims.
In response, HMRC has recently started sending out letters inviting recipients to correct any errors that may have made on claims – the letters should not be ignored.
Even if you believe no declaration is due, a response by letter should be sent. This will be the only opportunity employers have to remedy any errors without penalties being charged, so it is crucial responses are made promptly.
All claims are checked and full records supporting the claims will need to be available for checking.
The Finance Act 2020, schedule 16 contains an amnesty for notifying HMRC of errors or overclaims. Those who fail to notify HMRC within the ‘amnesty’ period but knowingly received the CJRS grant or overclaimed will be penalised based on ‘deliberate and concealed’ behaviour. This could potentially mean an employer is liable to a penalty of 100% of the tax due.
What type of errors could an employer need to correct in relation to a CJRS claim?
In line with the time limits of the amnesty, the following behaviours should be checked and corrected if you are aware of any of the following:
- Any remote staff working whilst on furlough e.g. work-related emails being generated or line managers asking furloughed staff to carry out work duties.
- technical or computational issues –any innocent errors that have occurred as a result of misunderstanding of the methods of certain calculations will not be targeted.
- Any delays in making payment to staff for the wages due from the furlough grants
- Any deliberate fraudulent behaviour
If your accountant has submitted claims on your behalf, aside from your computations and payroll records they may not be aware of any other conditions that may have been broken. If you have any concerns these should be raised with them urgently.
At the moment, roughly 3,000 letters are being dispatched per week, HMRC are urging employers to act with integrity and declare any overclaims that may have been made either in error or fraudulently. There are already cases hitting the headlines of companies who have been found to have fraudulently claimed. The current approach gives employers a chance to make corrections and act honestly and openly.
Jim Harra, the Head of HMRC said: “We are not going to set out to try and fine employers who have made legitimate mistakes in compiling their claims because this was obviously something new that everyone had to get to grips with in a very difficult time.”
In addition to the letters, HMRC has also set up a hotline for reporting furlough fraud.