Coronavirus Job Retention Scheme (CJRS) – How employers can minimise the risk of potential penalties

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As expected, HMRC have begun to investigate those Employers who may have been claiming incorrect furlough grant payments through the CJRS.

Where a breach of the rules has resulted in incorrect furlough grant claims being made, HMRC will seek to recover the overpayments received, together with statutory interest and a significant penalty.

Due to the complexity of the furlough rules, many employers will have inadvertently made incorrect claims as a result of misunderstandings. If, as a result of this, the furlough grant has been over claimed, those employers will also find themselves facing what could be significant settlements.

We recommend that employers review their claims now, and, if an error is identified that results in an overclaim of the furlough grant, immediate action should be taken to correct this. If the error is notified to HMRC and corrected within the notification period, penalties can be fully mitigated.

The notification period ends on the latest of whichever date applies below:

  • 90 days after you receive the furlough grant you are not entitled to, or;
  • 90 days after the day circumstances changed so that you were no longer entitled to keep the furlough grant.

If the incorrect claim is outside the notification period, making an unprompted disclosure and correcting the error, if handled correctly, should result in some mitigation of the penalty. It will also be seen by HMRC as an indicator good corporate governance which will reduce the employer’s overall risk rating.

We would suggest acting swiftly to review your claims.

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