Calculating the correct amounts of employees costs to claims under HRMC’s furlough scheme and the lack of an error correction facility during the claim process has given a headache to many an employer. The online error correction facility only applies to over-claims of CJRS grants
HMRC added information to its guidance on how to work out the amount to claim through the coronavirus job retention scheme (5th June).
If you have over-claimed the CJRS grant in an earlier claim you need to amend the amount claimed in the current claim and take into account the amount of over-claim, and make sure to tick the box to say a correction is being made.
The HMRC guidance says the employer should keep records of the amounts of the CJRS claims, the claim period for each employee, the calculations and any corrections made, for six years ALBEIT, similar HMRC guidance on the communication required with each employee about their furlough periods, says those records should be kept for only five years.
The online error correction facility only applies to over-claims of CJRS grants. If you have under-claimed the CJRS grant due, you should NOT adjust your next CJRS claim.
To correct an earlier under-claim of the CJRS grant you will need to call HMRC on the coronavirus technical line: 080 0024 1222. The HMRC officer can put through a parallel claim for the extra grant due and provide a claims reference number.
NIC Costs, Pension Contributions – Are you claiming Employment Allowance?
The HMRC factsheet about the new flexible furlough scheme states that around 40% of CJRS claims have not included employer NIC costs or employer pension contributions, which are both permitted as part of a claim.
The same factsheet said the average level of wages claimed under CJRS so far is £1,380 per month. This average monthly pay would generate an employer class 1 NIC liability of £89.42 and employer workplace pension contributions of £25.80, indicating an under-claim of £115.22 per employee per month using 2020/21 thresholds.
Where the employer has claimed the Employment Allowance (now £4,000 per year), any employer’s NIC covered by that allowance should be excluded from the CJRS claim.
Directors must notify HMRC of an CJRS grant over-claim – penalties may be possible if you over-claim
Draft legislation, which brings the CJRS grant into the tax system to be taxed as income, also includes provisions that allow HMRC to claw back any coronavirus support payments which were not due.
If you are a director and you do not notify HMRC of the over-claim of a CJRS grant, a penalty may be applied under the failure to notify rules, treating the error as deliberate and concealed. Penalties imposed at 30% to 100% of the overpayment (if the employer voluntarily disclosed), or 50% to 100% of the overpayment where the disclosure was prompted by HMRC.
HMRC is expected to take a light-touch approach to penalties, and not penalise for genuine errors.
Your accountant should be able to help you.
HB Accountants are accountants for business. For financial and accounting or Tax guidance and support, please contact Keith or Karen or Amy. We’re still working hard for all our clients to help you make the right decisions.
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The information contained above is for general guidance purposes only. Whilst every effort has been made to ensure the contents are accurate, please note that each individual has different circumstances and it is essential that you seek appropriate professional advice before you act on any of the information contained herein. HB Accountants can accept no liability for any errors or omission or for any person acting on or refraining from acting on the information provided in the above