When these schemes we hastily introduced by the government there were always going to be business owners who would miss out and those who would abuse them. Now, as they are coming to an end in the Autumn, HMRC has turned to looking at the abuses and those who have over-claimed.

CJRS repayments

Any incorrect CJRS grant claims in which the employer has overclaimed the amount due can be corrected in a later CJRS claim. If the employer has submitted their final CJRS claim there is a facility to repay HMRC online which has been in place since 26 June.

If the employer has under-claimed the CJRS grant, the extra amount of grant due needs to be set-up directly by HMRC, and the employer should not adjust the amount claimed in a later CJRS claim. 

A CJRS grant should be repaid to HMRC if the funds were not used within a reasonable period to reimburse the employer’s costs relating to furloughed employees, such as furloughed wages, employer’s class 1 NIC and employer’s contribution to a workplace pension.

SEISS repayments

The self-employed income support scheme (SEISS) has always lagged behind the furlough grant scheme (CJRS), and the applications for the second SEISS grants will open on 17 August.    

The SEISS grant is calculated by HMRC, so a valid claim can only be marginally overpaid if HMRC has made an error.

The HMRC guidance says it will work out if the trader is eligible for a SEISS grant and contact them to invite them the trader to apply. However, HMRC can’t check the three current-period conditions for the SEISS grant:

• Whether the trade has been adversely affected by the coronavirus pandemic
• If the individual traded in 2019/20 (if the tax return for that year hasn’t been submitted)
• Whether the trader intends to continue to trade in 2020/21

If any of those conditions are not met the SEISS grant has been incorrectly claimed, the trader needs to tell HMRC as soon as possible and repay the overpaid amount.Disclosure must be made using the same government gateway user ID and password that was used to claim the original SEISS grant.

Notification period

When the draft legislation was proposed for taxing the coronavirus support payments (SEISS, CJRS and SSP reclaims), it included a 30-day period for taxpayers to notify HMRC of corrections needed to any of those claims. This notification period was then extended to 90 days.

If the taxpayer notifies HMRC by the 90th day after the claim was submitted,  no penalty will be imposed. This gives taxpayers until 20 October 2020 to come clean about any overclaims of SEISS, CJRS or SSP.

Penalties

If the taxpayer does not repay HMRC the amount of coronavirus support payment overclaimed, HMRC will raise an assessment of tax equal to the overclaim. This assessment can be appealed.

Where the taxpayer fails to notify HMRC of the overclaimed coronavirus support payment within the 90-day period HMRC will impose a penalty under the failure to notify rules. The penalty is calculated at 30% to 100% of the overclaimed amount, for an unprompted disclosure, but will be set at 50% to 100% of the overclaimed amount for a prompted disclosure.

Thus, a taxpayer who is investigated by HMRC and is found to have incorrectly claimed a CJRS or SEISS grant will be required to repay 150% to 200% of those funds. 

The majority of over-claims will have arisen unwittingly on behalf of the taxpayer, rather that wilful abuse, because they have misunderstood the eligibility criteria (which have been far from clear). If you think this may apply to you, you’ve got time before the 20 October deadline, so check with your accountant or payroll provider and make the necessary declaration.

Noel Guilford