Job Retention Scheme – Headlines and (penalty) Deadlines.

Article | Matthew Eady | 9th October 2020

If you have any questions or concerns please do not hesitate to speak to your PEM contacts directly

Speak to someone
The Coronavirus Job Retention Scheme was launched as part of a range of measures to help UK employers retain their workforce at the beginning of the COVID-19 crisis. To date, the Job Retention Scheme has paid out approximately £35.4 billion of furlough payments helping over a million businesses.

The Job Retention Scheme comes to an end on 31 October 2020, being replaced by the less generous Job Support Scheme which is scheduled to run for the following six months.

Since the Job Retention Scheme was first launched in March 2020, the operation of the scheme has been amended at regular intervals to include the launch of Flexible Furlough from 1 July 2020; the removal of the ability to claim for Employer’s pension contributions and Employer’s NICs from 1 August; and the restriction on the amount of relevant furlough wages that could be claimed from HMRC after 1 September. Each change has been accompanied by various iterations of HMRC Guidance, often being released at the end of a working week. Inevitably perhaps, HMRC estimates that between 5 -10% of all claims paid may be erroneous or fraudulent. Whilst HMRC appear to accept that legitimate mistakes will have been made as employers got to grips with the fast-evolving scheme very quickly such that they will not “actively be looking for innocent errors”, they have stated that they expect employers to check their claims and repay any excess amount claimed.

HMRC have already commenced civil proceedings against a number of fraudulent claims and sent compliance letters to approximately 11,000 employers stating that they believe that their Job Retention Scheme claims are incorrect, albeit these letters do not state the amount of the believed overclaim nor the period it refers to. Therefore, employers should review and correct, as necessary, all claims made since the Job Retention Scheme commenced.

Where an overclaim has been made, the employer can:

  • Correct it in their next Job Retention Scheme claim; or
  • If no further claims will be made, make a payment to HMRC as soon as possible.

Where furlough pay has been overclaimed and not already repaid, an employer must notify HMRC by the latest of either:

  • 90 days after the date the employer received the grant it was not entitled to;
  • 90 days after the date the employer received the grant it was no longer entitled to keep because its circumstances changed; or
  • 20 October 2020

This means that an employer with an obligation to make a repayment of some or all of a claim made before 23 July 2020 has until 20 October 2020 to notify HMRC of this fact. Failure to meet these timescales may result in a penalty being levied. The subsequent repayment of the overclaimed amounts is required by further HMRC deadlines.

PEM has extensive experience of assisting clients with the Job Retention Scheme and can undertake an audit of an employer’s Job Retention Scheme claims to determine if these were made and received correctly. Please contact employmenttax@pem.co.uk if you would like to find out more about the service that we offer, especially if you have received an HMRC Job Retention Scheme compliance letter. 

About the author

Matthew Eady

Matthew is a Partner in our Employment Tax team. He joined PEM in 2006 and achieved Partnership in 2017. He Read more …

Sign up to receive practical guidance on CORONAVIRUS (COVID-19)

Sign up