HMRC CJRS compliance review | Update

We have recently seen an increase in employers receiving CJRS Compliance reviews from HMRC. The requests can be time-consuming and daunting to businesses, and also go back as far as March 2020.

The deadlines given by HMRC are often only two weeks and employers are finding themselves requesting an extension, especially when they are outsourcing the work to a company such as ourselves to allow for the additional review process.

Some employers may not know that a full review is needed and therefore may fall into a higher penalty bracket as per the CC/FS11A form.

Due to how quickly the impact of the pandemic took hold, the Government were not able to add red tape to those using the Coronavirus Job Retention Scheme (CJRS) – businesses needed support, and they needed it quickly.

HMRC responded by rapidly issuing the funds; however, they confirmed that they might carry out compliance checks in the future.

The CJRS supported businesses with £68.5 billion during the depths of the pandemic. However, after the sudden increase in spending, there soon followed an increase in fraud cases being reported to HMRC. With HMRC originally expecting to investigate 15,000 claims over the subsequent two years, this soon doubled to 30,000.

While the great majority of CJRS claims have been made in good faith, some interpretations of the CJRS guidelines may differ from that of HMRC.

The Payroll team at Price Bailey have experience working with clients that have received a compliance check letter from HMRC investigating their CJRS grant claim.

Case Study

HMRC requires proof of all workings made on the initial 80% reference period used in addition to the calculations used for each pay period (weekly/monthly). These calculations can be very time-consuming for business owners.

One of our clients was challenged on their CJRS claim and received a charge for an over-claim. We responded to the allegations on their behalf by providing HMRC with further reasons and clear evidence for the method of calculations.

We evidenced our reasoning using extracts of guidance we used to draw our calculations, which we obtained from GOV.UK and other documents from March/April 2020.

Upon providing this clear evidence and arguing the case on behalf of our client, HMRC agreed that we were correct and wrote off all over claim charges for our client.

How can I prepare for a compliance check?

It will be interesting to see the depth in which HMRC will investigate the CJRS claims in the future. It highlights the importance of ensuring you have the right legislation documented – to best prevent needing to make repayments to HMRC.

Other ways to prepare for a compliance check include;

Ensuring all furlough workings are saved on file and are easily accessible should you be audited; this is for each pay periods calculation, but also for the reference salary used for the 80%.
Be prepared to find the legislation used to back up your workings.
Ensure all payslips and reports reflect the furlough payments and, again, are available to reconcile against.
A record of the claims submitted to HMRC, along with payments received from HMRC.

To find out what you should do if you receive a compliance check letter from HMRC regarding an over-payment of a CJRS grant, you can read our article ‘HMRC furlough investigations are set to double to 30,000’.

If you require further support regarding HMRC compliance checks, repayment of a CJRS or SEISS grant, or any support regarding employment or payroll, please contact Zoe Masterson, an assistant Payroll manager at Price Bailey, using the form below.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

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