EMPLOYMENT & TAX DISPUTES

Furlough Fraud & Errors! Protect Your Business Now

The Employment Tax Dispute Team at Millar McCall Wylie are assisting Employers with disputes with HMRC arising out of payments made pursuant to the Coronavirus Job Retention Scheme (“CJRS").

Purpose of CJRS

The CJRS was introduced as a response to the ongoing Covid-19 crisis, to support employers whose operations have been detrimentally impacted by the ongoing Covid-19 pandemic. The CJRS commenced in March and will cease at the end of October 2020.

Initially the CJRS guaranteed 80% of the wage costs of any employees “furloughed” as a result of the coronavirus pandemic, subject to a cap of £2,500 per month. Since the start of September 2020, the Government are contributing 70% of employee’s wages, capped at £2187.50 with the employer contributing 10% of wages, capped at £312.50, together with NI and pension contributions. From October the government’s contribution will be reduced to 60%, capped at £1875 and the employer having to contribute 20%, capped at £625.

HMRC recovery

The Finance Act 2020 received Royal Assent on 20 July 2020, enabling HMRC to recover CJRS monies from employers in certain circumstances. The Act provides HMRC with new powers to clawback fraudulent or incorrectly claimed CJRS payments by converting each £1 of excess or wrongly claimed payment into £1 of income tax liability (100% clawback). This 100% clawback applies regardless of whether the claim was made innocently, carelessly or deliberately. Employers who disagree with a decision made by HMRC regarding tax may dispute their liability by initially requesting an independent review by an officer not previously involved in the case , and if the matter remains unresolved the taxpayer can lodge an appeal to the Tax (First Tier) Tribunal or consider HMRC’s ‘Alternative Dispute Resolution’ process.

Financial Penalties

HMRC has commenced a review of payments made to Employers and inevitably, those who received payments and were ineligible for the CJRS, or those who received more than they were due, will be issued with financial penalties. HMRC report that approximately £3.5billion has been incorrectly paid under the CJRS (around 10% of all payments). Therefore, as lockdown measures are lifted, HMRC will ramp up their focus on recouping monies paid to those who were not entitled.

In addition to repayment of CJRS monies, HMRC have introduced a penalty regime to sanction Employers for any overpayments. The percentages of penalties vary, on a sliding scale, in relation to when, or if, the taxpayer discloses that an overpayment has been made and is dependent on the co-operation of the taxpayer with HMRC. In particular, HMRC will take account of whether or not the employer knew they were not entitled to the CJRS grant when it was received. The maximum penalty payable is 100% of the improperly claimed CJRS monies. Therefore in total, Employers may be liable to repay twice the amount of CJRS monies claimed. “Deliberate defaulters” may also be subject to HMRC’s ‘naming and shaming’ on their website and in the media.

Time to rectify and notify

HMRC have introduced a deadline for Employers to disclose and correct any overpayments, of the later of 20 October 2020 or 90 days from receipt of payment. HMRC have up to 20 years to pursue investigations in relation to deliberate non-compliance, 6 years to pursue any careless non-compliance claims and in any other circumstances, they have 4 years to investigate claims.

It is imperative that Employers seek advice immediately to assess their entitlement to the CJRS, avoid penalties and potential criminal proceedings. Contact the Employment Tax Dispute Team at Millar McCall Wylie today for advice and assistance on your business’ eligibility for CJRS monies or with appealing a HMRC decision in respect of your entitlement to the scheme.

 

X
X
X
X
X

X

 

X
X
X
X