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Markel Tax

21 Jul 2020

CJRS – HMRC’s Compliance powers confirmed in 2020 Finance Bill

On 2 July  the 2020 Finance Bill received its third and final reading in the Commons and its first reading in the Lords, the final readings, committee and report stages are all due on 17 July and Royal Assent expected on 21t July 2020. Steve Price and Jacqui Mann now consider some of the implications for those who have made claims under the Coronavirus Job Retention Schemes (CJRS).

Steve and Jacqui’s previous article ‘CJRS - HMRC’s compliance activity moves a step closer’ ( examined the original draft legislation during the report stage and while much remains the same in the final Bill, there has been one key change in the legislation that can now be found at s 106 and sch 16.

The original draft legislation cited a requirement to correct erroneous claims within 30 days of either making the claim or the Finance bill being given Royal Assent, whichever was later. Any failure to do so would attract a deliberate and concealed penalty, irrespective of the reasons, adding another 50% - 100% to the amount to be paid back. Following consultation, HMRC amended this part of the Bill, extending the notification period from 30 days to 90 days. Under para 12 of sch 16, those who need to notify chargeability to HMRC must now do so within either 90 days of the date on which the charge arises (the date of the erroneous claim), or the Bill receiving Royal Assent, whichever is later.

This change will be welcomed by employers who are already under huge pressure on all fronts, but at the same time this should be seen as a final opportunity to correct claims, in order to avoid penalty charges. HMRC will argue that the additional time gives them far greater justification to refute claims of ‘reasonable excuse’ and potentially paves the way for them to seek more severe penalties.

If, as expected, this Bill receives Royal Assent and becomes law on 21 July 2020, all CJRS claims made prior to this date must be corrected by 19 October 2020 at the very latest.

HMRC will be under huge pressure to act promptly to recover amounts over-claimed and to penalise those who have claimed inappropriately. Given that the CJRS scheme will, according to current plans, be nearing its end at around the same time as this key deadline, it is highly likely that late October / early November 2020 will see the start of a significant increase in HMRC’s compliance activity.  

This activity is supported by the wording of the new legislation which at para 9 of sch 16 of the Finance Bill sets out:

If an officer of Revenue and Customs considers (whether on the basis of information or documents obtained by virtue of the exercise of powers under Schedule 36 to FA 2008 or otherwise) that a person has received an amount of a coronavirus support payment to which the person is not entitled, the officer may make an assessment in the amount which ought in the officer’s opinion to be charged under paragraph 8.

This wording leaves employers vulnerable to HMRC’s officers’ own individual interpretation of the situation, which in the face of any uncertainty, will seek to protect HMRC’s position.

Given how quickly the CJRS has evolved and the numerous clarifications, changes and amendments made along the way, the risk of having inadvertently submitted incorrect claims is extremely high. It is imperative that employers and agents not only check claims but have full documentary evidence to support their calculations. Having the appropriate evidence available will help to minimise the risk of over-zealous HMRC officers making unwarranted assessments in line with their own opinion and raising penalty charges.

An example of how this continuing rapid evolution has created uncertainty and anxiety is the recent amendment to the drafting of the section of legislation dealing with the stated purpose of the CJRS. This was reworded to say that it is ‘integral’ to the scheme that the money is “used by the employer to continue the employment of employees’”. This language, so open to interpretation, has sparked very real doubts about whether employers of furloughed workers, now under threat of redundancy, should have received the assistance of the CJRS at all, if the employees are not to be retained. Discussions continue, but this is just one instance of how the legislation may be perceived differently by HMRC and other stakeholders.

Once again, the urgent message to employers is to check the validity of all previous claims now and certainly within the timeframe allowed. Use the additional time provided within this legislation to check all claims against the latest guidance, keep abreast of developments and ensure you have the relevant back-up. As advised in our earlier article on this matter, if HMRC apply the same thought process when considering reasonable excuse as was legislated for in the Failure to Correct rules, it may be advisable to ask a third party to do the checking, as this will provide the strongest defence against the levying of penalties if errors are discovered after the deadline has passed. This could be time and money well spent when weighed against the risk of assessments and high penalties. 

For advice and assistance on CJRS contact on 0333 920 5708 or by email at Steve Price or Jacqueline Mann

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What could possibly go wrong? Five issues HMRC look for in a CIS review