• Control the controllables with your CJRS reviews – benefits and consequences

Control the controllables with your CJRS reviews – benefits and consequences

16 September 2021

Definition of control – “the ability or power to decide or strongly influence the particular way in which something will happen”

In an uncertain world we all like to have some element of control, some element of being able to dictate what happens. So why are many businesses giving away control of their CJRS reviews to HMRC?

42% of food and drink manufacturers in our 2021 survey said they had utilised CJRS in response to COVID-19. In this article we will look at how manufacturers can influence the CJRS review process by looking at why businesses should review their CJRS claims, the benefits of doing so and potential consequences of not.

Why Review?

Complexity – The introduction of CJRS and its various concepts were totally brand new to the UK tax system which meant that as it had no history there was a very steep learning curve right from the beginning. This meant that it started off complicated and just got more complex as it grew.  

The fact that there have been four different versions of the scheme, over 420 changes to HMRC guidance since March 2020 and over 30 areas where a claim could go wrong all points to how complex the scheme is.

Unless you have been able to keep up to date with all the changes, some even happening several times a day then there is a high chance there will be an error somewhere in your CJRS claim.

HMRC Activity – In Budget 2021 the Chancellor announced a £100m investment in setting up a dedicated team within HMRC to review CJRS claims as it is estimated that anywhere between £3.5bn and £7bn has been incorrectly claimed. This team has been drawn from across HMRC with many National Minimum Wage inspectors being drafted in.

Although targeting furlough fraud, HMRC have also stated they will be looking to enforce the CJRS guidance to maintain its integrity. This has the potential to catch some businesses out who often took a short cut in the calculation due to issues getting the right data off their systems.

With the amount of resource being provided to review CJRS claims there is an increased chance of being selected for review either because the business profile contains known risk areas or simply being part of the random selection.

Tax Return Reporting – in the latest versions of corporation tax and self-assessment tax returns there is an ‘opportunity’ to include a figure for any CJRS overclaim. There is a risk that if this figure is completed without any kind of review that it will further compound the issue as there will now also be an incorrect tax return.

Benefits of Reviewing your CJRS

The main benefit of undertaking a CJRS review is that it provides the opportunity to make a voluntary disclosure to HMRC as opposed to having no review and HMRC opening an enquiry. For the reasons outlined below making a disclosure is far preferable to being on the end of an HMRC enquiry

Review with HMRC Disclosure

No review higher risk of HMRC Enquiry

Less costly than enquiries

More costly in terms of business time, internal resources, and professional fees.

Gives greater control on the timescale to report back to HMRC.

Lose control of timescales for delivery of information to HMRC

Any disclosure would be unprompted meaning the minimum penalty could be reduce to 0%

Becomes a prompted disclosure moving the penalty to between 15% and 30%.

Gives business certainty to move forward with no surprise liabilities.

Business uncertainty with the potential of a surprise liability as HMRC have up to 6 years to enquire into CJRS claims.

Helps demonstrate taking “reasonable care” by being pro-active and making the first approach to HMRC.

Becomes harder to demonstrate taking “reasonable care” by letting HMRC make the initial approach to the business.

In summary….

Unless you have mastered all the changes and complexities of CJRS it is highly likely that you will need an independent review of your claims. Therefore, rather than leaving it to the chance of an HMRC enquiry why not take control and have your claims reviewed.

If you would like to discuss your CJRS claim with us further, please don’t hesitate to get in touch.

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