Reply to HMRC’s furlough scheme letter, rather than ignore it – law firm

Contractors shouldn’t necessarily follow the ‘say no’ advice about meeting the taxman about IR35 when it comes to him asking PSCs to self-audit their CJRS usage, a law firm suggests.

In fact, in light of HMRC writing to limited companies to request they check their furlough scheme claims, Chartergates indicates that complying is probably best to conclude the matter.

“Whether the taxpayer in receipt of the letter contacts HMRC is a decision for each recipient…keeping in mind that not doing so runs the risk of further contact”, the firm says.

'Prudent'

So while there is no statutory obligation on PSCs or other recipients to respond to the HMRC letters, carrying out the invited check seems “prudent”, believes the firm’s Naseerah Mussa.

But she said even finding “absolute certainty as to the [accuracy] of the amounts claimed,” would not preclude HMRC from later conducting a formal review into a PSC’s usage.

“If a company does detect a CJRS overpayment, under the Finance Act, the taxpayer must notify HMRC of the overpayment by October 20th 2020,” Chartergates also advised yesterday.

“Or [they must notify HMRC at] 90 days of receipt of the grant, or [at] the change of circumstances -- meaning entitlement ceased, whichever [of the three] is latter.” 

'Thorough approach'

However in such cases of error, the taxpayer should first contact their professional adviser, before going forward to HMRC directly, Mussa added.

“We would advise a thorough approach to checking and calculating any amounts which are claimed under the CJRS and ensuring all CJRS records are retained for a period of six years in the event of a HMRC review,” she said. “If in any doubt, the PSC should seek professional help to review their claims.” 

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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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