Furlough (Coronavirus Job Retention Scheme (CJRS)) – overpayments
Due to the Coronavirus (COVID-19) the government and HMRC introduced a scheme to help businesses called the Coronavirus Job Retention Scheme (CJRS). This was where a business could claim for some of their employee’s wages if they put them on furlough or flexible furlough because of coronavirus (COVID-19).
Initially, from March until the end of August, the government (via HMRC) paid an employer 80% of an employees wages (up to £2,500 per month) if they placed the employee on furlough. From 1 September, the government will pay 70% of wages up to a maximum cap of £2,187.50 for the hours the employee is on furlough. Employers will top up employees’ wages to ensure they receive 80% (up to £2,500).
In total, up to the end of August 2020, the programme has cost the government £35.4bn so far.
However, up to £3.5bn in Coronavirus Job Retention Scheme payments may have been claimed fraudulently or paid out in error, the government has said.
HM Revenue and Customs told MPs on the Public Accounts Committee it estimates that 5-10% of furlough cash has been wrongly awarded.
HMRC’s permanent secretary, Jim Harra, said: “We have made an assumption for the purposes of our planning that the error and fraud rate in this scheme could be between 5% and 10%.
“That will range from deliberate fraud through to error.”
HMRC are now actively contacting companies that they believe have been paid incorrectly wither by error or fraudulently.
If a business has overclaimed a CJRS grant and have not repaid it, they must notify HMRC by the latest of these three dates or risk paying a penalty:
- 90 days after the date they received the grant you were not entitled to;
- 90 days after the date they received the grant that they were no longer entitled to keep because their circumstances changed;
- or 20 October 2020
Under legislation, companies who have dishonestly claimed furlough based on dishonest or inaccurate information will face penalties or criminal action. The civil penalties are 100% of the amount not used for employees’ costs. The penalties can be imposed on the company and/or The Directors, Partners or Sole trader owner of the business. Criminal charges may also be brought for which the penalties could include imprisonment.
If you think your business has inadvertently claimed too much furlough money or if you have had contact from HMRC suggesting they believe you have then please get in touch with us immediately. We can take over the negotiations with HMRC on your behalf.