Government confirms ‘amnesty’ to be offered to employers over furlough scheme breaches
The Government has confirmed that it plans to offer an ‘amnesty’ to employers who have furloughed employees during the COVID-19 crisis without meeting the conditions of the Coronavirus Job Retention Scheme (CJRS) – enabling businesses to repay any sums without penalties or further sanctions.
HM Revenue & Customs (HMRC) has encouraged employees to report fraud relating to the CJRS in its latest guidance, as well as providing links to an online form to assist in reporting any issues.
The Finance Bill, which is currently going through Parliament, also includes measures that allow HMRC to recover payments made under the CJRS, which an employer was not entitled to. It will operate by imposing an income tax charge equivalent to 100 per cent of the CJRS grant to which the recipient was not entitled and which has not been repaid.
Under the planned amendments to the Bill, if an employer notifies HMRC within 90 days of when Royal Assent is granted to the Finance Bill, or when the income tax became chargeable, whichever is the latter, it will be able to repay any financial support received under the CJRS without incurring any penalties. The Bill is expected to receive Royal Assent by the end of July 2020.
An employer who does not notify HMRC within the 90-day ‘amnesty’ period, but who knew that it was not entitled to a CJRS grant at the time that income tax first became chargeable, will be liable to a penalty on the basis that the wrongdoing was deliberate and concealed.
There is a minimum penalty of 30 per cent of the grant improperly claimed, and a maximum penalty of up to 100 per cent.
The income tax liability contained in the Finance Bill will not be limited to fraudulent claims for funding under the CJRS. HMRC may also raise an income tax assessment on an employer where it believes that the employer has received a grant to which it was not entitled, regardless of whether the erroneous claim was made innocently, carelessly or deliberately.
The proposed amnesty offers employers an opportunity to correct any irregularities under the CJRS without incurring penalties.
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