Coronavirus Job Retention Scheme
The government has confirmed that the:
• CJRS will be extended until 31 March 2021;
• Job Retention Bonus will be cancelled;
• Job Support Scheme is being postponed.
This is a return to the rules as they were in August 2020 with both fulltime and flexible furloughing allowed. All employment rights continue during furlough, and employees can train, volunteer, or work for another employer whilst furloughed.
For hours not worked, employees will receive 80% of their current salary up to a maximum of £2,500 per month, with employers only having to pay Class 1 secondary National Insurance contributions and pensions contributions. As before, employers may choose to top up the employee’s wages if they wish but are under no obligation to do so.
The government will review the scheme in January 2021 and decide if employers should contribute more for February and March 2021.
The scheme will be available to employees on any type of contract including full-time, part time, agency, flexible or zero hour contracts. Foreign nationals are also eligible to be furloughed.
To be eligible for the extended scheme:
• employees do not need to have been furloughed under the CJRS scheme before but must have been on their employer’s payroll on 30th October 2020;
• employers do not need to have used the CJRS previously, but must have made a PAYE RTI submission between 20th March 2020 and 30th October 2020 notifying a payment of earnings;
• employers can claim, whether their businesses are open or closed, for any number of employees.
Salaried directors can be furloughed provided they meet the eligibility criteria, but the grant will only cover regular pay and it will not include dividends. These directors can only carry out statutory duties such a filing the financial statements.
Company directors with an annual pay period are eligible for the scheme from November provided that the company has made an RTI submission between 20 March 2020 and 30 October 2020 notifying HMRC of a payment of earnings for that director.
Coronavirus support payment penalties
HMRC are able to levy penalties on those who have incorrectly claimed under the Job Retention Scheme, the Self Employed Income Support Scheme and the Eat Out to Help Out scheme.
A help sheet has now been published by HMRC which clarifies the HMRC approach.
The amounts have to be repaid where a recipient was not being entitled to the amount they receive including:.
• Never being entitled
• Ceasing to be entitled because of change of circumstances or
• Not paying the costs that the scheme was supported to reimburse
HMRC are going to seek repayment in all cases where there has been an overpayment even if this is not deliberate.
It is less likely to be an issue with SEISS since HMRC calculated the amount due so there was no scope for an amount to be inadvertently claimed.
Penalties are levied under the failure to notify chargeability provisions ie you did not tell them you were not entitled.
If chargeability is not notified, then the consequent penalties become due and payable. The legislation refers to the fact that if a person knew at the point at which the income tax became chargeable that they were not entitled to the amount of the payment, then the offence will be deliberate and concealed. The penalty for a deliberate and concealed offence is 100% of the potential lost revenue ,being the amount overclaimed.
The helpsheet now published makes it clear that any failure to tell HMRC that there is an overpayment of grants will be potentially penalised.
Under the heading ‘what is failure to notify’ the guidance states ‘if you have received a coronavirus support payment that you are not entitled to, you must tell us about this by the end of the notification period. If you do not do this, we call this a failure to notify’.
So even if you have innocently received an amount rather than deliberately claiming, you could be penalised.
It is made clear that they will not charge a penalty if all of the following apply:
• There is a reasonable excuse for the failure to notify
• The failure to notify was not deliberate
• You notified without unreasonable delay after the reasonable excuse ended.
If you know that you received a payment to which you were not entitled, you should make sure you tell HMRC sooner rather than later, and god help you if they find you first. Remember, they know who received payments, they know where to find you and they have time on their side.
Budget March 2021
The Permanent Secretary at HMT has confirmed that the next Budget will be held in March 2021. The precise date has not yet been announced.
Its going to be an interesting one but may not herald anything too painful yet.
Self-Employment Income Support (SEISS) compliance activity
HMRC has sent around 24,000 emails to traders who have claimed grants under the SEISS but who HMRC believe may have ceased trading and do not qualify for the grants.
These individuals have been asked to complete a form to confirm that either:
• they have ceased trading and need to repay the grant; or
• HMRC’s information is incorrect and they did not cease trading or have restarted.
In cases where the taxpayer accepts that they need to repay the grant HMRC will follow up with an assessment.
Where the taxpayer responds to say that they have continued trading HMRC may request further evidence.
Apparently HMRC is checking out businesses that have made claims by contacting them by phone in a business-related capacity to see what response they receive.
An example that we have hear about was of HMRC staff posing as a potential customer seeking the services of businesses that should be closed. In theory, only businesses fraudulently claiming funds should be concerned and rightly so.
However, all businesses need to be careful as their response could trigger a further investigation by HMRC. For example, furloughed directors should only be undertaking statutory duties and dealing with customer queries does not fall into that category. When handling phone enquiries, answers need to be clear. Maybe it would be safer to have a standard voicemail recording, explaining that the business is closed due to COVID-19.
Cunning aren’t they!