The recent COVID-19 situation has been a very challenging time and Government support, most specifically the introduction of the Coronavirus Job Retention Scheme and the Self-Employed Income Support Scheme payments have been valuable for many affected companies and individuals.
HMRC have become aware, however, that a number of businesses have made claims to receive support to which they were not entitled.
As such the Finance Act 2020 now contains specific measures to claw back any monies claimed that were not due, plus interest and in some cases, large penalties.
This legislation covers but it not restricted to:
– Coronavirus Job Retention Scheme payments / employee furlough support
– Self-Employed Income Support Scheme payments
– A Statutory Sick Pay reclaim for your business
– A business support grant
HMRC will be investigating businesses to see if they have made a claim to which they were either not fully or partly entitled to. They will also be looking to see whether those businesses have in fact been adversely affected and whether the monies claimed have been used for the purpose intended i.e. to reimburse employees’ salaries or replace self-employed business income which was reduced as a result of COVID-19.
HMRC have now introduced a period of amnesty which will allow businesses and individuals a chance to review any claims they have made and ensure they were fully entitled to all funds received. If that is not the case, there is the opportunity to inform HMRC and repay the funds without any further action being taken.
The notification and reimbursement period ends on the latest of whichever date applies below:
– 90 days after you receive the grant you’re not entitled to;
– 90 days after the day circumstances changed so that you were no longer entitled to keep the grant; or
– 20 October 2020
If you are later found to have made an incorrect claim, either negligently or knowingly, and have not made a notification to HMRC, you will be assessed to tax at 100% on the amounts you have claimed. This will also attract interest if not paid within 30 days of the assessment being raised. HMRC will also consider charging a penalty which could be as much as 100% of the tax depending on the reasons for the claim being made.
Company officers, who knew the company had overclaimed a grant at the time it was received, or knew at such other time when a tax liability arose that the claim was overpaid or not used for the intended purpose, can be made personally liable to pay the tax charged on their companies in circumstances where the business is in insolvency and the tax cannot be recovered.
Self-employed business owners who have claimed via the SEISS should also take time to review whether their business income has actually been adversely affected by the pandemic and can demonstrate this, should HMRC challenge the claim.
HMRC have already commenced criminal proceedings against a number of businesses deemed to have made fraudulent claims. It is also likely that they will fully investigate any businesses where they suspect a false claim has been made. As such it is highly advisable that all businesses review any claims made and funds received and take advantage of the amnesty period in any relevant situations.
If you have any questions, please contact our team for advice.