Coronavirus Job Retention Scheme: HMRC nudge campaign on including grants in tax returns
HMRC are checking that companies have included CJRS grants in their taxable income – here’s what employers need to do.
HMRC are checking that companies have included CJRS grants in their taxable income........
HMRC are issuing ‘nudge’ letters to companies where they have been unable to reconcile the Coronavirus Job Retention Scheme (CJRS) grants paid to those disclosed by the company in their accounts, corporation tax computation, and on their Company Tax Return (CT600). This article considers what employers should do to confirm their disclosures and the underlying grants are robust, regardless of whether they receive a letter from HMRC.
What’s the issue?
Like most other coronavirus support payments, CJRS grants should be included as taxable income in claimants’ tax returns.
However, HMRC have been unable to reconcile their records of the grants paid to some CJRS participants with the income disclosed in those companies’ corporation tax returns .
What action are HMRC taking?
HMRC are issuing ‘nudge’ letters to companies where they have been unable to reconcile the CJRS grants paid to those disclosed by the company in their accounts, corporation tax computation, and on their Company Tax Return (CT600). These letters give recipients 30 days to review their relevant corporation tax returns and either:
- Submit an amended return which includes any omitted CJRS grant income; or
- Confirm that all CJRS grant income has in fact been included.
Where all relevant CJRS income has been included as taxable income in a return, but this is not clear from the disclosures in the company’s accounts, computation and CT600, HMRC ask that employers who receive a ‘nudge’ letter explain where the grant income is included to let them reconcile their records with the return. In these circumstances, there is no need to submit an amended return in response to the ‘nudge’ letter.
Whilst a ‘nudge’ letter is not an enquiry notice, employers should take them seriously and respond within the 30-day time limit. HMRC can still open a formal enquiry into a return, or into the underlying CJRS claims, should they have any further concerns.
What should employers do now?
Regardless of whether they receive a ‘nudge’ letter, employers who participated in the CJRS should confirm that the grants they received are included in full and appropriately disclosed in their accounts, corporation tax computation, and CT600.
Employers who identify omitted CJRS income should file an amended return.
When reviewing submitted returns, employers should bear in mind the changes to HMRC’s guidance on how to disclose CJRS grants received (see our articles of 13 September and 27 September 2021).
Ensuring your CJRS claims are correct
This development demonstrates HMRC’s continued focus on CJRS compliance. Therefore, employers should also confirm that their CJRS claims are supportable based on HMRC’s prevailing guidance at the relevant time, and that any errors are identified and corrected.
This is particularly important when submitting or amending the CT600, as the relevant company officer confirms that the entries - including those relating to the CJRS grants the employer was entitled to receive and retain - are to the best of their knowledge, complete and correct.
For companies 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.
How KPMG can help
HMRC encourage employers who participated in the CJRS to self-review and correct any errors identified. Additionally, all claims submitted are potentially subject to HMRC review.
We have extensive experience working with organisations to review their CJRS claims. If you would like to talk through how KPMG can help you review your claims and returns, please speak to the contacts below or your normal KPMG contact.
