Coronavirus Job Retention Scheme: HMRC release updated guidance

Last week, HMRC released some short but key updates. One was in relation to how to correct errors in Coronavirus Job Retention Scheme (CJRS) claims. The other was detailing how the recently announced Job Retention Bonus for employers will work.

Here, our experts have summarised these key updates that every employer needs to know.

Correcting claim errors and HMRC enforcement

HMRC have issued a short guide on how to correct errors in a CJRS claim.  They cover two scenarios:

1. An employer has claimed too much

If an employer wants to delete a claim online, they must do this within 72 hours.

If they want to report an error which means they have claimed too much, they can either:

  • Report this when they submit their next online claim. The new claim will be reduced accordingly (they should keep a record of the adjustment for six years) or
  • If they are not making any further claims, contact HMRC to pay the money back (this option should only be used if they are not submitting another claim).

There is a 90-day window during which an employer can report overpayments to HMRC and repay overpayments without penalty. The guidance says the overpayments must be reported by the latest of either:
  • 90 days after the date the payment was received to which they were not entitled or
  • 90 days after the date circumstances changed so that they were no longer entitled to the CJRS payment or
  • 20 October 2020

HMRC states in the guidance “We will not be actively looking for innocent errors in our compliance approach”.

2. An employer has not claimed enough

In these circumstances, the employer will have to contact HMRC as they may need to carry out additional checks.

HMRC enforcement action for abuse of the CJRS

The Finance Act 2020, which became law last month, provides HMRC with extensive powers to take enforcement action against those who have abused the CJRS.

The starting point for penalties will be 100% of the sums incorrectly claimed. This can be reduced if the employer is fully co-operative and repays the overpayment as quickly as possible but it cannot fall below 30% and will not be reduced below 50% if HMRC had already started their enquiries at the time action to rectify was taken.

Company officers can be held jointly and severally liable where a company is insolvent.

HMRC also has powers to publish details of deliberate defaulters and have warned that they will consider criminal proceedings in cases where they believe there has been a deliberate misuse of the scheme.

Further information on the Job Retention Bonus

On Friday 31 July, HMRC published more information on the Job Retention Bonus. Further details will be published in September, but here is what we know so far about the scheme.

What is it?

The Job Retention Bonus (JRB) is a one-off payment to employers of £1,000 for every employee who they previously claimed for under the CJRS, and who remains continuously employed up until 31 January 2021, earning at least £520 a month on average between 1 November 2020 and 31 January 2021.

Which employers are eligible to apply?

All types of employers are eligible to claim the JRB including recruitment agencies and umbrella companies.

To be eligible, the employer must have:

  • made a correct claim under the CJRS for the employee. It will not be payable if the claim was incorrect. If HMRC believes there is a risk that the employer’s claims may have been fraudulently made or inflated, payment of JRB will be withheld pending the conclusion of their investigation.
  • complied with their obligations to pay and file PAYE accurately and on time under the Real Time Information (RTI) reporting system for all employees.
  • maintained enrolment for PAYE online.
  • a UK bank account.

Employers must keep their payroll up to date and accurate. They must also address any requests for further information from HMRC regarding their CJRS claims.

Which employees can they claim for?

To be eligible, the employee must have been:

  • furloughed and had a valid CJRS claim submitted for them.
  • continuously employed by the relevant employer from the time of the employer’s most recent claim for that employee until at least 31 January 2021.
  • paid an average of at least £520 a month between 1 November 2020 and 31 January 2021). The guidance states that the employee does not have to be paid £520 in each month but must have received some earnings in each of the three calendar months and must receive at least £1,560 across the 3 months.
  • have up to date RTI records for the period to the end of January.
  • must not be serving a contractual or statutory notice period, that started before 1 February 2021.

It’s clear from this that if notice of termination is served before the 1 February 2021, a claim for JRB can’t be made for that employee. Presumably, this would also apply if the employee resigned before this date and is working their notice as it does not specify that the notice has to be initiated by the employer. Perhaps specific clarification on this point will be available when further information is published in September.

Claims can be made for all employees who meet these criteria, including officeholders, company directors and agency workers (including those employed by umbrella companies).

The rules apply regardless of the frequency of the employee’s pay periods, the hours worked and rate of pay.

What is included in calculating the £520?

Detailed rules will be published on this in September.

The guidance states that only earnings recorded through HMRC Real Time Information (RTI) records can count towards this.

Military reservists and those returning from statutory parental leave

If employees in the above categories returned after 19 June 2020 and were claimed for under the CJRS, they will also be eligible for the purposes of making a JRB claim. The exception in the CJRS rules refers to ‘parental leave’ when in fact they mean wider statutory family-related leave such as maternity, shared parental, adoption, paternity, and parental bereavement leave. This would also apply here.

Fixed-term contracts

Fixed-term contracts can be extended or renewed without affecting eligibility for the bonus, provided that continuous employment is maintained.

Employees transferred under TUPE or a change in business ownership

The new employer may be able to claim the JRB in respect of these employees if they have been furloughed and successfully claimed for under the CJRS by the new employer (this will also be the case where TUPE would have applied had it not been for the liquidation of the transferring company).

JRB cannot be claimed where the transfer occurred after 31 October.

When can a claim be made?

Employers will be able to claim the JRB after they have filed PAYE for January. More details on the process will be published in September.

When will it be paid?

Payment will be made to employers from February 2021.

Is the bonus taxable?

Yes, employers must include the whole amount as income when calculating their taxable profits for Corporation Tax or Self-Assessment.

What should employers do now if they want to claim?

Employers must make sure their employee records are up to date and accurately reported through the RTI system.

They should also ensure their CJRS claims are correct and, where necessary, any changes have been notified to HMRC.

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