13th August 2020
Employers who have made errors when claiming under the Government Coronavirus Job Retention Scheme have a deadline in which to amend their mistakes and avoid penalties.
The scheme has been complicated for some and employers with intricate staffing structures may have unknowingly over-claimed or made mistakes when navigating the process. The introduction of flexi-furlough and the extended period that staff can remain furloughed for may have led to some mistakes being made when processing claims.
Benefit of the doubt is being given with a generous time frame for businesses to audit, check and correct their claims without incurring a penalty.
Employers have until 20 October 2020 (90 days after the Finance Act passed) OR 90 days after the date that income tax on the payment becomes chargeable, whichever is the later.
We would urge employers who are concerned about the accuracy of their claims to start sooner rather than later to allow themselves plenty of time to get this right.
Overclaiming in error could result in HMRC clawing back the funds from businesses along with adding large penalty charges on top. There is also potential risk of HMRC naming and shaming any businesses who have taken advantage of the scheme (in error or otherwise) which can lead to a PR nightmare for companies.
Businesses who have underclaimed in error face missing out on one the largest helping hands that the Government has outstretched to businesses in a time when cash flow is key.
The last few months have been a difficult, turbulent time for businesses and the last thing that business owners need this Autumn is added pressure and financial difficulty due to innocent mistakes that have been made.
Employers should keep detailed records in case they find themselves being scrutinised. Even if the calculations are wrong, if can be demonstrated that reasonable effort has been made to correctly claim, then HMRC can act accordingly and may reduce the penalties that would otherwise have been imposed.
Where you have various types of employees within a business, it is worth triple-checking that the claims are exact. New starters, leavers, those on variable pay, sick leave, maternity leave and those brought back from furlough earlier in the scheme could be tricky to calculate.
Any records relating to the Coronavirus Job Retention Scheme should be kept securely for 6 years.
HMRC is currently looking into thousands of reports of potential fraud by companies taking advantage of the taxpayer funded money. This includes businesses claiming for staff who continue to work or asking their staff to complete work tasks whilst they are furloughed. Along with businesses who have been agreeing their own terms with employees, making backdated claims or creating false employees.
This is illegal and businesses that abuse the scheme run the risk of being prosecuted. HMRC will be hot-on-the-heels of covetous business owners who fall foul of the legalisation with their confidential tip-off website already receiving circa 8,000 reports from concerned employees.
If you are a concerned business owner who wants to ensure you have calculated your claims correctly and followed the correct procedures when it comes to furlough (or other employment matters such as redundancies and dismissals) then you are encouraged to call the Lamb Brooks Employment Team for advice.
Our offices are open and you can call our professional legal advisors on 01256 844888, email firstname.lastname@example.org or speak to our online chat assistant.
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The contents of this article are for the purposes of general awareness only. They do not purport to constitute legal or professional advice. The law may have changed since this article was published. Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.
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