HMRC has announced the potential penalties that can be imposed on employers who commit fraud under the Coronavirus Job Retention Scheme.
The Job Retention Scheme was put in place to support employers who were not able to operate as normal due to the pandemic. However, some employers have likely overclaimed and may face sanctions if this is not reported and rectified.
The Government has explained that the following actions constitute an overclaimed furlough grant:
• Any amount the employer was not entitled to receive; or
• Any amount the employer is no longer entitled to receive after a change in circumstances
Companies will have until 12 months from when their accounting period ends to rectify errors. Sole traders or partners will have until 31 January 2022
Errors can be rectified by either contacting HMRC if no further claims are being made under the scheme or by notifying HMRC of the overclaimed amount in the next claim, failure to report this can incur such penalties as follows:
- Income tax charge – full overclaimed amounts may be recovered if HMRC make a tax assessment for the amount overclaimed
- Company officers can be made personally liable to pay the tax charged on overclaimed grants in the case of insolvency – if officers of the employer knew of the overclaimed grant or tax incurred on the grant, but this cannot be recovered from the company
- 100 per cent penalty for failing to notify HMRC, within the allowable notification period
- Details of employers that deliberately overclaim may be published
- Partners will be jointly and severally liable for any overclaimed grants repayable