Coronavirus Job Retention Scheme: what should employers do as the scheme closes?

The Coronavirus Job Retention Scheme (CJRS) has been vital in protecting jobs during the coronavirus outbreak. Based on HMRC’s statistics released on 9 September 2021, the scheme has supported a total of 11.6 million jobs, with around 1.6 million employees furloughed as at 31 July 2021. This article outlines steps employers should consider as the CJRS ends in order to ensure that claims are robust, and that any past errors are identified and corrected. It also updates employers on what they should do if, prior to HMRC’s Company Tax Return guidance being updated on 3 September 2021, they filed a CT600 that disclosed CJRS grant income.

Submit final claims

CJRS claims for periods that end during September 2021 should be submitted to HMRC on or before 14 October 2021.

Whilst employers should take every care to ensure CJRS claims are complete and in line with HMRC’s published guidance when they are submitted, where errors are made, it’s particularly important to identify and correct these as quickly as possible. This is because any errors that result in shortfalls in claims submitted for periods that end in September must be identified and corrected on or before 28 October 2021.

Additionally, any errors that result in overclaims (which must be repaid to HMRC) should be identified and disclosed to HMRC within 90 days of the overclaims arising.

Ensure historical claims are robust

All employers who participated in the CJRS have an obligation to ensure their claims were:

• Based on a reasonable interpretation of HMRC’s prevailing guidance when each claim was submitted; and
• Prepared with reasonable care.

HMRC encourage employers to self-review and correct any errors identified, and all submitted claims are potentially subject to HMRC review.

Other stakeholders, such as employees, suppliers, customers, investors and auditors, may also require comfort that submitted CJRS claims are robust.

For employers within the Senior Accounting Officer (SAO) regime, HMRC will also expect the SAO to certify that appropriate tax accounting arrangements were in place in respect of the CJRS.

Employers who were supported by the CJRS should therefore consider a full review of submitted claims to confirm these are appropriate, and ensure the underlying data, positions taken, and judgements made are documented and available in the event of any future HMRC review, or other stakeholder challenge.

Employers should also ensure that all relevant records are retained in line with the information retention requirements of the CJRS.

CJRS disclosures in the Company Tax Return (CT600) – an update

As we reported in our previous article, HMRC recently updated their guidance on how CJRS claims should be disclosed in the Company Tax Return (form CT600) for the purposes of calculating any ‘claw back’ income tax charge necessary to recover overclaimed CJRS grants.

Key clarifications were that:

• CJRS grants for an accounting period should be disclosed in the CT600 on a receipts, rather than on an accruals, basis;
• CJRS grants which were voluntarily repaid to HMRC do not affect the CT600 entries (so voluntarily returning a CJRS grant does not reduce the total grants received, or to which the employer is entitled, as disclosed in the CT600); and
• Certain adjustments to reported figures will be required where an overclaim was corrected by reducing a subsequent claim received in the following accounting period.

Companies that filed a CT600 based on HMRC’s previous guidance, which was in places ambiguous, should review their submitted return in light of HMRC’s updated position.

However, in a welcome development, HMRC have now confirmed to KPMG that it is not necessary for employers to file an updated CT600 reflecting HMRC’s new approach if the level of any overpayment reported to HMRC on the CT600 would remain unchanged.

For further information please contact:

• Eloise Knapton
• Caroline Laffey