While government grants are hailed as having helped millions of businesses survive the Covid-19 lockdown and saving many more millions of jobs, there was always going to be vulnerability that the system would be abused, manipulated, or just misunderstood.
It is difficult to quantify, but reports show that multiple companies have taken advantage of the grant schemes and financial support available - some without being eligible.
So, what can you do if you're worried about your claims, think you might have made a mistake, or want peace of mind that your grants are all accounted for?
Let's run through the new legislation, understand the potential penalties, and what you can do to put your mind at ease!
HMRC Penalties for Incorrect Claims
As with most things HMRC related, the onus falls on the claimant to ensure they are claiming the right amount. The new powers granted to HMRC mean that penalties can be issued with a 100% tax rate for incorrect claims.
One of the most common examples is manipulating the furlough scheme - i.e. claiming up to 80% of worker salaries, while those staff continue to be at work. HMRC report 1,900 complaints from the public by 31st May alleging furlough fraud.
Estimates show that millions of pounds have been spent on fraudulent claims. Starting from mid-July, HMRC can investigate, reclaim, and penalise companies who have committed fraud.
Issues include:
- Over claiming.
- Not using grant funds for the intended purpose.
- Incorrectly filing claims.
This won't be of concern to businesses that have submitted valid claims, but if you have any doubts about your grants, now is the time to act.
Saving Grace - Declaring Incorrect Claims
Of course, most errors aren't deliberate, and in a time of global chaos and new initiatives, it isn't any surprise that some businesses have simply made mistakes.
This arises from conflicting governmental advice, trying to negotiate new online systems and questionable functionality such as websites crashing mid-way through claims due to the volume of traffic.
If you think you have made a mistake, either claiming through the Coronavirus Job Retention Scheme (CJRS) or the Self-Employment Income Support Scheme (SEISS), you have 90-days to declare it and pay back the difference.
Claimants repaying over claims, or inaccurate claims, will not be fined or charged a penalty.
Should a company have claimed financial aid incorrectly, and fail to report and repay the cash, they are liable for:
- Prosecution.
- Fines.
- Demands for immediate repayment.
- Tax penalties of 100% of the value.
Deadlines for Declarations
The timescale for declaring incorrect or overstated claims was originally 30-days, which was extended following extensive complaints. The amendment is called FA 2020, and revises the timelines as follows:
- 90-days after the claim was submitted.
- For applications before 22nd July 2020, a deadline of 20th October 2020.
This deadline applies to claims made under the following grant schemes:
- Self-Employment Income Support Scheme (SEISS)
- Coronavirus Job Retention Scheme (CJRS)
- Statutory Sick Pay Claims (SSP)
Help if You Think You Have Over Claimed Coronavirus Financial Support
If you are concerned about your claims, need help verifying that they were accurate, or think you have made a mistake, get in touch with SAS Accounting today!
We work with you to:
- Calculate the accurate value of claimable grants or loans.
- Liaise with HMRC to report any errors.
- Organise repayments or additional claims as applicable.
- Put your mind at rest that your claims have been verified.
Get in touch with SAS today, and we'll ensure that your HMRC affairs are well managed, under control, and up to date.
