How to repay overclaimed CJRS grants to HMRC

HMRC have updated their guidance on repaying Coronavirus Job Retention Scheme (CJRS) furlough grants that have been overclaimed by employers.

Did the CJRS protect jobs?

The CJRS ran from 1 March 2020 and closed on 20 September 2021. During that time, 11.7 million employees had been furloughed, at a cost of £70 billion. Two of the sectors with the highest furlough rates at the end of the scheme were the arts, entertainment and recreation sector with 9% (47,600) of jobs and the accommodation and food services sector, with 9% of jobs (156,900).

Source: House of Commons, Coronavirus Hob Retention Scheme statistics, 23 November 2021

The CJRS has played a huge part in keeping unemployment lower than expected during 2020. In April 2020, the Office for Budget Responsibility published a reference scenario where unemployment would peak at 10% in Quarter 2 of 2020. In reality, the highest rate of unemployment was 5.2% in Quarter 4 2020 and has been falling since.

Although the scheme did not protect all jobs. According to the Institute for Fiscal Studies, around 1 million people were made redundant between April 2020 and June 2021 (almost double the same period in 2019).

Employer obligations

HMRC are encouraging employers to review their claims and correct any errors. They state that they understand that ‘mistakes can happen‘ and are not actively looking for ‘innocent errors in our compliance approach‘. However they may issue penalties if employers have overclaimed and have not repaid within a relevant time period. This is 31 January 2022 for a sole trader or a partner and for companies it is 12 months from the end of your accounting period.

If you knew you were not entitled to your grant (either at the time you received it or when it became repayable) and do not notify HMRC in the required time period, it is treated as deliberate and concealed. HMRC can charge a penalty of up to 100% on the CJRS amount that you were not entitled to receive.

How do I repay?

Employers, or their agents, must use the online service to get a unique payment reference number before they can pay HMRC back. You must notify HMRC if you’ve overclaimed and not repaid it by:

  • 90 days after the date you received the grant you were not entitled to
  • 90 days after the date you received the grant that you were no longer entitled to keep because your circumstances changed
  • 20 October 2020

Corporation tax return

The CT600 corporation tax return has also been amended to require companies to report CJRS grants received and the amount they were entitled to. The updated form also requires the company to report any overclaimed amounts already repaid using the procedure above and the balance still outstanding.

For more information or advice, get in touch with a member of our team on 01903 234094.