ICAEW.com works better with JavaScript enabled.

HMRC compliance powers on CJRS and SEISS tabled for debate

Updated 6 July: Legislation introducing HMRC’s powers in relation to coronavirus support payments has been tabled and following representations by ICAEW, businesses will have 90 days to notify HMRC of a grant that needs repayment.

New Clause 19 and new Schedule 1 of the Finance Bill 2020 have been tabled in advance of the report stage of the Bill which is expected to be on 1 and 2 July 2020.

This clause and Schedule confirm the taxability of Coronavirus Job Retention Scheme (CJRS) and Self-employment Income Support Scheme (SEISS) grants, and outlines how HMRC will be able to recover payments to which the recipient is not entitled and charge penalties in cases of deliberate non-compliance.

The operation of the schemes has been legislated through directions, but the taxability and powers must be in primary legislation.

The legislation confirms that SEISS grants are taxable in 2020/21, irrespective of the treatment for accounting purposes (para 3(3), new Sch 1).

SEISS and CJRS grants to which the recipient is not entitled will be recovered by way of an independent 100% income tax charge (with the regular tax charge being dis-applied) (para 8, new Sch 1).

Under the legislation businesses that are liable to repay a grant to which they are not entitled must notify HMRC within 90 days of the act being passed or the date on which the charge arises, whichever is the later (para 12, new Sch 1). The notification period has been extended from 30 days to 90 days following representations by ICAEW and other professional bodies.

The legislation also gives HMRC the power to levy penalties for any failure to notify chargeability, but only in cases where the failure is deliberate and concealed (para 13, new Sch 1).

Update 6 July: Following a further review of the draft legislation, it appears that the Finance Bill clauses give HMRC wider powers to charge penalties. The Tax Faculty has asked HMRC to clarify the position and understands that further guidance will be published.

HMRC has now published guidance on how to repay CJRS grants that have been overclaimed. Employers can now make a correction in a subsequent claim. If no further claim is being made the employer needs to contact HMRC to obtain a payment reference number. Underclaims can only be corrected by phoning HMRC.

Further information