HMRC writes to limited company directors over furlough scheme usage

Limited company directors are among those HMRC is asking to review their Coronavirus Job Retention Scheme usage, despite such PSCs’ furlough payments often being entirely correct.

In an email update, Chartergates said the Revenue is writing to two types of businesses to get them to scrutinise their own CJRS claims, “whether or not there has been a miscalculation.”

The first type of business receiving the HMRC letters are those who “may” have claimed more under the CJRS than they are entitled to, the law firm said.

The second recipient of the Revenue letters are those firms who “may not meet the conditions” for a CJRS grant, or whose staff don’t despite being included in the claim.

'First stage of HMRC compliance checks'

“We understand that the letters are the first stage of HMRC’s compliance approach and they will look to contact more employers in the future,” the email update states.

The HMRC letters asking firms to check their CJRS usage (regardless of a miscalculation in the grant) come after the department miscalculated 16,200 claims under a similar scheme.

In fact, the Revenue overpaid or simply paid the wrong amount to sole traders who had signed up to the Self-Employed Income Support Scheme, to get financial aid from covid-19.

'HMRC probes very likely'

Those 16,200 victims of the error have now been written to by HMRC, with an outline of how much they were wrongly paid, and detail on the amount they ought to have been paid.  

“We would advise a meticulous approach when checking or calculating the amounts claimed via schemes such as the CJRS,” said Chartergates, “as well as the retention of supporting records.”

The law firm added: “In the event of a HMRC review which, in our view, is very likely at some point, such evidence will prove invaluable.”

'Prevented you from controlling your business'

The advice follows another adviser to contractors revealing new detail around HMRC accepting coronavirus as a ‘reasonable excuse’ for taxpayers not fulfilling their obligations.

“HMRC states you would need to explain how you were affected by coronavirus in your appeal,” says tax dispute specialist Jesminara Rahman.

In a guest article for hmrctaxinvestigations.co.uk, the director of Tax Resolute UK then quoted from an HMRC email: “For illness to be considered a reasonable excuse, the illness must be so serious that it prevented you from controlling your business and private affairs immediately before the deadline.”

The clarification comes after HMRC yesterday made yet another update to its CJRS guidance, stating that employers using an official claims template for 100 or more employees “may be rejected,” if the detail inputted is submitted in the wrong format.