HMRC had previously announced a final deadline for submitting or amending JRS claims for periods to 31 October 2020 – employers should act now to ensure they don’t incur any additional employment costs, writes Eunan Ferguson, Director, KPMG in Belfast.
JRS claims for periods ended on or before 31 October 2020 should be submitted, and any underclaims corrected, by 30 November 2020. Employers should therefore prioritise preparation and review of claims for periods up to and including 31 October 2020 to confirm whether any corrections or notifications are required by 30 November. It is particularly important that employers ensure any underclaims for periods that ended on or before 31 October are identified and corrected by that deadline. This is necessary in order to avoid any liability for the cost of correcting any underpayments made to employees, which will otherwise fall on the employer thereafter, or the potential challenge that the full claim is invalid if HMRC consider the underlying calculations were not prepared in line with the relevant guidance.
HMRC have confirmed that, notwithstanding the JRS will now remain open until 31 March 2021, on or before 30 November 2020 employers must:
Any overclaims for periods ended on or before 31 October 2020 (as well as any for subsequent claim periods) should be corrected or reported to HMRC within 90 days of the date on which they arose. Unless repaid within 90 days of the date on which they arise, overclaims need to be notified to HMRC and then recovered through a special income tax charge on the employer.
Employers who underclaimed JRS grants must ensure furloughed employees receive their full entitlement, regardless of whether the employer has amended and increased the original claim.
After 30 November 2020, the full cost of correcting any underpayments made to employees for periods ended on or before 31 October will therefore fall on the employer as it will no longer be possible to correct and increase the original JRS claim (although where this applies there remains a risk HMRC could consider the full claim for that employee to be invalid).
In addition to ensuring final claims for periods ended on or before 31 October 2020 are submitted by 30 November 2020, employers who took an overly prudent approach to calculating ‘reference pay’, or to any other aspect of calculating their JRS grants, should therefore review those calculations to make sure they identify and correct any underclaims before the deadline.
Any JRS claims that were overstated, or which subsequently became excessive (e.g. where an employee undertook revenue generating work during furlough hours), must be repaid to HMRC.
Overclaims that are not repaid within 90 days of the date on which they arose should be notified to HMRC before the end of that 90-day period. HMRC have issued guidance on when penalties may be imposed for late notification. Any relevant overclaims will then be recovered through a special income tax charge on the employer.
Whilst HMRC are yet to issue guidance on the point, we understand employers will also be required to report details of any overclaims, repayments, and special ‘claw back’ income tax charges on the relevant CT600 company tax returns.