Many small businesses are worried about the possible penalties from accidental furlough fraud, so how can you avoid it, and will you have to pay back HMRC if you overclaimed in error?
The Government has been very supportive of employers who needed to furlough some or all of their staff during the lockdown. However, it has now explained what constitutes overclaimed CJRS grants and what actions it considers could lead to furlough fraud.
This comes down to one of two circumstances:
- any amount the employer was not entitled to claim
- any amount the employer is no longer entitled to, but still claimed for
An example would be of an employee who left the company whilst furloughed, where the former employer is still claiming for them under CJRS.
HMRC has stated that it is not obliged to investigate genuine and innocent errors, as long as the payments are repaid within 12-months of the end of their accounting period, but it is actively looking for non-compliance by employers and will not hesitate to apply major penalties where it sees fit.
If you have made an incorrect claim under CJRS, you can make a direct payment back to HMRC (if you do not intend to claim again) or adjust your next claim accordingly to account for the error. Either way, ensure you notify HMRC of the overpayment and how you are remedying the situation.
And always keep detailed records of your claims, just in case.
If you'd like to find out more about anything I've written here, do call me on 01908 774323 or leave a comment below and let's see how I can help you.