The Institute of Chartered Accountants in England and Wales (ICAEW) has warned taxpayers that they have 90 days to notify HMRC of overclaimed coronavirus (COVID-19) grants.
The 90-day period to inform HMRC of any overclaimed amounts is now law. Finance Act 2020 recently received Royal Assent, which confirms the taxability of the Coronavirus Job Retention Scheme (CJRS), as well as the Coronavirus Statutory Sick Pay Rebate Scheme and COVID-19 business support grants.
Finance Act 2020 also gives HMRC the power to recover grant payments from a non-entitled recipient. HMRC has the ability to charge penalties also.
Guidance on overclaimed grants and penalties:
Broadly, if an employer has overclaimed a grant, it must repay it as soon as possible. It can do this by adjusting a subsequent claim or if no further claim will be submitted, by contacting HMRC. If it has not repaid an overclaimed grant in this way, it must notify HMRC within the notification period set out in the overclaims guidance (broadly the latest of 90 days of receiving the overclaimed grant or 90 days after the circumstances changed meaning the employer was no longer entitled to the grant; or 20 October 2020).
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Where an employer has underclaimed, they will need to contact HMRC. Underclaims relating to the period before 30 June 2020 are not possible after 31 July 2020.
HMRC may recover an overpaid grant by making a tax assessment for the amount the employer was not entitled to and has not repaid. Payment is due within 30 days after notification of the assessment. HMRC may charge Interest on late payments. There will also be a late payment penalty if the payment remains outstanding for 31 days after the due date.
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