Furloughed PSCs get help with overclaims, ahead of the CJRS turning more costly

Furloughed PSC contractors who overclaimed salary are being urged to go forward to HMRC about the scheme, which Rishi Sunak sounds keen to end as it starts to cost employers.

Speaking on Friday, the chancellor recommitted to winding-up the Coronavirus Job Retention Scheme by October, in line with the timeline which the government outlined in June.

But it’s not just employers on the chancellor’s mind (since August, the CJRS no longer pays employer NICs and pension contributions in respect of furloughed staff). It’s workers too.

'Trapped'

“It’s wrong to keep people trapped in a situation and pretend there is always a job they can go back to,” Mr Sunak told the BBC, despite not altogether ruling out extending the scheme.

The chancellor added: “That won't always be the case. In those situations, it's better we look forward and provide those people with new opportunities.”

But the current concern of CJRS advisers is for those scheme users who overclaimed their grants, given the government made a “removal of information” in guidance relevant to them.

'No need to call HMRC'

After the information was “moved to a new guide”, add the official CJRS page-update notes, some advisers took to LinkedIn to provide access to the details. Or they just advised the stranded directly.

“You can let HMRC know as part of the next online claim [you make] without needing to call HMRC,” advised Tax Resolute’s Jesminara Rahman, referring to three new deadlines.

“Otherwise, you may have to pay 100% tax on the CJRS furloughed amount and 100% penalty. [And] please keep records of how you calculated the furlough claim.”

'Won't be looking for innocent mistakes'

Her plea follows a stark warning from HMRC, buried in the new CJRS overpayment details, stating: “We will not be actively looking for innocent errors in our compliance approach.”

But referring to one of the new overclaiming reporting deadlines – ‘90 days after the date you were no longer entitled to keep it,’ another tax expert said HMRC’s language was misleading.

“They say ‘you were no longer entitled to keep’,” said accountant Juan Carlos Venegas. “That’s confusing, as the grant amount is to pay employees. Technically, no one is keeping it.”

'Grey area'

He also took issue with HMRC saying overpayments can be due if “circumstances changed”, and asked if bosses must therefore repay a CJRS grant from, say, June, if trade spiked in July.

“This is a grey area,” reflected Ms Rahman. “Each case will be judged on its own facts. There will not be a one-size-fits-all approach. [Instead] HMRC will be looking at the intentions [and] behaviours behind the actions.”

In a new policy paper, the Revenue has confirmed that where a claim for an employee was incorrectly made, the chancellor’s new Job Retention Bonus will not be payable.

Published on the eve of the now in-force August 1st contributory phase of the CJRS, the paper outlines what employers need to do to claim the £1,000 (per employee) bonus.

'Viability'

Full guidance on the bonus is due in September (the month when employers must pay 10% of the furlough wages) but by then, a law firm indicates that uptake will be considerably less.

“The changes to the scheme, with the added burden on the employer, means that many will be considering the continued viability of the CJRS,” said Chartergates.

The firm added: “Whether this involves altering furlough agreements, bringing staff back off furlough or considering the viability of continuing to employ members of staff, [remains to be seen].”

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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