On the proposed amendments to the Finance Bill on how HMRC proposes to deal with employers who have made errors relating to COVID-19 support payment claims, Dawn Register, Tax Partner at BDO comments
“The window of opportunity to correct mistakes in furlough claims or other COVID-19 support payments administered by HMRC is to be extended from 30 to 90 days. This is a welcome change that gives businesses a more realistic time period to check their claims and notify HMRC of any corrections. Given the huge volume of government guidance and changes in July already, we consider the extension to a 3 month period is crucial to allow businesses time to review claims and seek professional advice where necessary.
“The legislation will now also cover the new Coronavirus Statutory Sick Pay scheme, in addition to the furlough (CJRS) scheme, the SEISS and other Covid-19 grant schemes.
“If a company received ‘furlough monies’ which it was not entitled to then it will be subject to 100% income tax on those monies. The legislation now confirms that this tax is not payable under Quarterly Instalment Payments (QIPS), which is also a helpful clarification for larger companies.
“We expect there will be many cases where innocent mistakes are made given the difficult trading conditions for businesses during Lockdown. Also a ‘catch up’ exercise may be needed on paperwork. Businesses should start to check and double check now that their Government support claims are correct.
“We know HMRC is receiving whistle-blower reports where abuse of COVID-19 support is suspected. We expect HMRC enquiries and serious investigations will follow the 90 day correction window for those who fail to rectify any incorrect claims.
“The 90 day period will start after Royal Assent of the Finance Bill and this is expected before the end of July 2020.”
The latest Government figures show that to the 21st June, 1.1m employers have received £22.9bn under the Coronavirus Job Retention or ‘furlough’ Scheme. Meanwhile, £7.6bn has been paid out to 2.6m self-employed businesses under the Self-Employment Income Support Scheme.