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CJRS: HMRC letters alarm employers

HMRC is writing to selected employers, asking them to review their CJRS claims. But the letters don’t specify what is wrong with the claim, or even which month’s claim HMRC has an issue with.  

11th Sep 2020
Tax Writer Taxwriter Ltd
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HMRC believes between 5% and 10% of CJRS grants contain mistakes or have been illegally claimed (ie fraud). HMRC’s Jim Harra, speaking to the Public Accounts Committee, estimated the value of CJRS fraud or error to be £1.75bn to £3.5bn, but that assumes that every error has made an entire CJRS claim completely incorrect.

In reality, there are likely to be a large number of very small errors spread across many claims, as the furlough pay calculations presented a steep learning curve for payroll staff and tax advisers. For example, the confusion about holiday pay and entitlement was highlighted by Kate Upcraft, so it is unsurprising that mistakes have been made.       

HMRC said it will focus on fraudulent claims and not on cases where the employer has made an innocent error. It has identified 27,000 CJRS claims where something looks wrong, and it is initially enquiring into 11,000 of those claims.   

What does the letter say?

The HMRC compliance letter says the employer’s CJRS claim appears to be incorrect because, for example, ineligible employees were included, or too much was claimed for some other reason. No details are given of how much the overclaim may be or who the potential ineligible employees are.

The HMRC letter doesn’t even detail which CJRS claim the employer has submitted that is suspected of being incorrect.

To find out where the error may lie the employer or their agent will have to trawl through the details of every CJRS claim submitted for the months April to August, looking for the one or two potentially ineligible employees, and double-check every single furlough calculation.   

What is triggering the letters?

A trigger for these letters could be that the employer was including employees on furlough who were not paid through that PAYE scheme in February or March 2020, but who do qualify as they fall into one of the exceptions Kate Upcraft outlined in July:

  • transferred from another employer under TUPE
  • transferred from another PAYE scheme as a result of a scheme reorganisation
  • returned from parental leave
  • returned from active military service after 10 June

Those exceptions may not have been picked up by the HMRC computer when it compares the payroll details the employer submitted in March 2020 to the list of employees on furlough for say July.

What action should employers take?

The compliance letter asks employers to respond to HMRC by telephone, if they think the CJRS claim was correct. However, as AccountingWEB member Charlieb81 reported, it can take some time for HMRC to answer the call.

Once the call is answered, and the employer passes the security questions they are told that an HMRC officer will be assigned to the case, but the system for processing the CJRS investigations won’t be ready for some weeks. This contradicts the letter which says that if a reply is not forthcoming by 22 September HMRC will open a compliance review which could trigger penalties. 

Where there is an overclaim

If the employer thinks that the CJRS claim is incorrect they are asked to reply by email, and then instructions will be given to make a formal disclosure. This is a bit premature as there is still time to make a voluntary correction of earlier CJRS claims as explained in July.

The structure of penalties for overclaimed CJRS grants is set out in factsheet CC/FS48. But no penalty will be applied for errors in CJRS claims if the excess grant is corrected within the later of:

  • 90 days from the receipt of the grant, and
  • 20 October 2020.

There are also no penalties for submitting an inaccurate CJRS claim which resulted in a grant that was lower than the employer was entitled to. 

Reply by email

Tax agents should get a copy of the CJRS compliance letter if one is sent to their client, but that system doesn’t always work, so remind clients to send you a copy of the letter they receive. Use the email address in the letter to reply with reasons why the CJRS claim is correct or not.

Replies (19)

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By Echo761
11th Sep 2020 10:14

These are nudge letters... similar to "the TV detector van is in your area". Psychological warfare from HMRC. The only people who will be bothered are those who submitted correct claims. Deliberate fraudsters will not care a fig.

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Replying to Echo761:
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By Paul Crowley
11th Sep 2020 15:02

Agree
If HMRC expects recalculations without giving reasons then it demonstrates yet again that employers subsidise the state for state inability to cope

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Replying to Paul Crowley:
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By gillybean04
11th Sep 2020 17:51

Surely it's the other way around? If HMRC did include reasons then the taxpayer is subsidising the employer's incompetence?

It may also affect the amounts recovered. What if HMRC pick up on one issue but there are others? The potential fraudster would just declare the mistakes hmrc knew about.

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Replying to Paul Crowley:
By tonyaustin
14th Sep 2020 11:23

If the employer has completed the claim with proper care and taken advice where needed and is then satisfied that the claim is complete and correct to the best of their knowledge and belief then they just have to tell HMRC that. Of course, if HMRC then investigates and finds the claim was incorrect due to fraud or insufficient care being taken then expect a higher penalty. HMRC will not say what they think the error might be in order to encourage the employer to check everything and not just correct what HMRC have found or suspect. Normal HMRC enquiry procedure.

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By kathyk0410
11th Sep 2020 19:20

One of our clients did receive a letter and it did take several calls for my colleague to get through. However when he did he was basically asked by an intermediary if he understood the claim process, did he understand the eligibility criteria and had he found any errors! They said the letter was computer generated that may have been triggered from information entered. Details of the call would then be passed onto the Employer team who may get in touch. Hopefully not!

Thanks (4)
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By Calculatorboy
12th Sep 2020 23:00

I think its hmrc just flying a kite ,like the tv detector Vans which dont exist

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By Nebs
14th Sep 2020 09:36

When you've checked everything, and found it to be 100% correct, don't forget to include with your reply an invoice to HMRC for your time costs.

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By arthvirg230
14th Sep 2020 09:54

We had a few phone calls from HMRC a month or so ago querying clients claims - HMRC response was "the claim looks like there may be an error in the claim" - they assured us that there may well be no error - but could we just check the claims to make sure they are correct!! as someone else said here - just fishing!!

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By jamiea4f
14th Sep 2020 10:43

Desperate for cash, gotta fund Boris's bonkers business closures to protect 0.01% of the population...

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By colinwain
14th Sep 2020 11:15

We had a client who took their eye off the ball, and forgot to make their furlough claim for June, even though they had claimed for every month before and subsequent. HMRC are saying that its too late for a June claim now, as claims for up to 30/6 needed to have been made by 31/7.

Has anyone else had a similar experience, or found a solution?

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Replying to colinwain:
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By Ian McTernan CTA
14th Sep 2020 12:02

Weren't you monitoring these on behalf of clients and reminding them? And if they can forget to make a claim then maybe they didn't need the money.

I made sure every eligible client had made their claim, every month. All part of the service.

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Replying to Ian McTernan CTA:
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By colinwain
14th Sep 2020 12:12

Ian McTernan CTA wrote:

Weren't you monitoring these on behalf of clients and reminding them? And if they can forget to make a claim then maybe they didn't need the money.

I made sure every eligible client had made their claim, every month. All part of the service.

Well done you. Thanks for your helpful reply.

Thanks (2)
Replying to colinwain:
Stepurhan
By stepurhan
17th Sep 2020 08:59

There is no solution. That deadline was fairly well advertised as part of the shift to flexible furlough. If both they and you missed that, you're out of luck.

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Replying to stepurhan:
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By colinwain
17th Sep 2020 10:17

stepurhan wrote:

There is no solution. That deadline was fairly well advertised as part of the shift to flexible furlough. If both they and you missed that, you're out of luck.

That's what I read to be the case unfortunately. It just seems a bit one sided that HMRC can go back to, say, April, and look for an error, yet the company can't.

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By Ian McTernan CTA
14th Sep 2020 12:00

'To find out where the error may lie the employer or their agent will have to trawl through the details of every CJRS claim submitted for the months April to August, looking for the one or two potentially ineligible employees, and double-check every single furlough calculation. '

Wrong. Just write back and ask what does HMRC think is wrong and for what time period. They think something is wrong, then they can tell you what it is. No need to waste hours double checking everything only to find HMRC is wrong as usual and there is nothing wrong they just hold bad information. they will need to do this anyway in order to raise any sort of assessment for an amount they think has been over claimed.

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By Silver Birch Accts
14th Sep 2020 12:49

With all this now going on , would it not be a good idea for Rishi to cancel the bonus in February. This is just going to exacerbate the problem. In my opinion it is not necessary.

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By Mr J Andrews
14th Sep 2020 13:46

UTTER MADNESS. But full marks to HMRC for coming up with a reasonably sound hedge betting plan.
By casting a slur that the CJRS claim was wrong , it's bound to prompt the fainthearted to plough through months of work and conduct reviews which HMRC are incapable of, owing to inadequate staff and staffing .
According to Rebecca , the Revenue has identified 27000 claims which ''look wrong''. But simply not having the appearance of textbook HMRC training exercises simply ain't good enough reason to make general accusations of innocent errors or fraudulent claims.
Any doubt - yes check. But if satisfied that all is complete and correct , respond to the compliance letter to that effect that it is assumed the letter was issued in error as no specific cause for concern has been mentioned.

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Replying to Mr J Andrews:
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By scurlage
14th Sep 2020 23:01

I had a call off HMRC (withheld number). Claim for April " slightly higher than expected ". They could not say by how much though. I checked it thru with them while they were on the phone and there were no errors.

I then got asked

Did I pay staff 80% or 100% - Some I do some I don't
Did I pay anyone who was not employed before the scheme start date - No
Had I included bonus in my calculations - No
Was I aware of the rules of the scheme ? - Yes

They then said " ok, but if you do find any errors details of how to correct it will be published soon "

Few days later I had a call off someone else who said " Your claim for April is slightly higher than we could have expected ". I explained I'd spoken to someone about this a few days previously. They did not seem aware but apologized for wasting my time.

I can only think it was a fishing trip. Either that or the fact that I had paid those who could afford a cut in pay 80% and those who could not 100% and their analytics were expecting one or the other.

Thanks (1)
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By CORSALOVER2
15th Sep 2020 08:38

Just as alarming are the letters alleging PAYE remittance inconsistencies and using 'we have the right to remove your CJRS subsidies if you don't pay us ...... when in all 3 cases with me, the payroll has been prepared with Brightpay, checked with my own system, and remittances have been made on time with all the correct numerical information.

So i each case i have written to HMRC with full information - again - and asked them to challenge what they think is wrong. Regrettably at the client's expense.

They really don't understand the huge hostility they are generating with these bully-boy tactics but unless I am prepared to tie up my phone lines for an hour - at my clients' expense - then letters will have to do. We seem to have no recourse to further action.

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