As HMRC’s initial round of enquiries into Coronavirus Job Retention Scheme (CJRS) claims progresses, their early findings point to a significant level of error in addition to the wider fraud risk. While this targeted enquiry programme continues, HMRC are widening the campaign to encompass all coronavirus grant support: the first nudge letters were due to be sent out at the end of January 2022.
HMRC are keen to encourage proactive review and disclosure, and our experience is that this behaviour is still being looked on particularly favourably when it comes to potential penalty discussions.
Where claims are being formally enquired into, this is currently based on:
Due to the well-publicised scale and consistency of claim errors, its clear that this will remain an HMRC priority for some time.
One common assumption is that HMRC are only concerned with big claims, but our experience has shown this is simply not true. While the costs of running an enquiry are certainly a consideration, we have seen enquiries relating to claims including only one employee. If HMRC consider that fraud is a risk or that addressing an issue has significantly wider implications, then they are prepared to put in the time.
If you receive a ‘nudge’ letter asking you to consider your coronavirus grants and support payments, then our recommended approach is in line with that for any other .
Whether you have received correspondence from HMRC or not, you should ensure you have correctly taxed any grant income and carried out an appropriate review of your CJRS claim calculations, approach and records. The costs of finding out later that a mistake was made can be significant both financially and for the reputation of your business.
Most companies who have not yet taken this step are aware of and relying on HMRC’s published statement that compliance efforts are not targeting innocent errors. However, our experience to date would suggest that failing to check claims properly is unlikely to be categorised as an innocent error. This means if HMRC do enquire and you haven’t documented the checks you have carried out, any errors identified are likely to be met with penalties.
We've reviewed a number of CJRS claims, both proactively and as a result of HMRC correspondence. Most of the claims we've reviewed contained issues which needed to be corrected. The key areas we have identified as problematic are:
Our findings mirror those of HMRC and these areas contain the key aspects of CJRS claims that they consider in their enquiry process, so any review conducted should cover those risks.
Our team of experts can help to review your claims, identify any issues, and support you through the process of putting them right. We can be by your side, leveraging our experience and network of connections at HMRC. Once we've worked together to determine a plan, we'll put together your response or disclosure and represent you in communication with HMRC to minimise any tax and penalties you may have to pay.
Get in touch with David Francis if you have any questions about 'nudge' letters, or would like guidance on any other compliance issues.