HMRC has issued new directions on what employers should do if they claim too little, or too much, from the JRS. This includes guidance on the new penalty and enforcement regime. In our latest video, Caroline Laffey, Partner – People Services, discusses the key things employers should consider.
Employers who have underclaimed need to ensure furloughed employees still receive their full entitlement. Any employers that have taken an overly prudent approach to calculating reference pay should take this opportunity to revisit those calculations.
Underclaims for periods that ended before 1 July can still be corrected in relation to employees who were included in the original claim.
HMRC should be contacted to amend underclaims.
Employers must repay HMRC where a JRS claim has been overstated, or a correct claim subsequently becomes excessive (e.g. where a furloughed employee returns to work sooner than expected). This also applies to JRS grants that are not used to pay relevant costs within a reasonable period.
Under new legislation, employers must formally notify HMRC of any overclaims that are not repaid before the reporting deadline. The notified amount will then be recovered through a special income tax charge.
Employers should review past claims and ensure future claims are subject to rigorous scrutiny, carefully documenting the processes and controls in place. Reviewing any under or over claims will provide valuable assurance to your employees, auditors and other stakeholders.
HMRC’s compliance approach won’t actively seek out innocent errors, or recover grants based solely on the employer’s choice of pay calculation if that choice is reasonable. This makes it more important for employers to be able to demonstrate a rigorous approach, and that judgements and positions are reasonable, robust and supported by HMRC’s guidance.
In further guidance published on 31 July, HMRC indicated that good JRS compliance is a precondition to making a claim for a Job Retention Bonus when that scheme goes live in 2021.