Coronavirus Job Retention Scheme update – July 2022

It started nearly two and a half years ago and the last claims were nearly 12 months ago, but HMRC are still very active in tackling errors and fraud in the system and on 18th July they issued their latest update on Covid-19 support schemes.

Gone but not forgotten

In the report they acknowledge that the COVID support schemes helped millions of people and businesses through the pandemic and that the Coronavirus Job Retention Scheme (CJRS) helped to pay the wages of people in 11.7 million jobs and nearly 3 million self-employed workers received a Self-Employment Income Support Scheme (SEISS) grant.

CJRS claims totalled £70 billion and claims for SEISS were £28.1 billion.

Compliance activity

HMRC’s position is that they have always sought to minimise fraud and error and ensure that organised criminals had very limited opportunity to exploit the schemes.

Pre-payment checks included:

• matching lists of known suspect organisations and devices against claims;
• comparing the claims to historic data (e.g. pre-pandemic payroll data);
• reviewing third-party information; and other intelligence (like calls to the Fraud Hotline).

Since the start of the schemes, HMRC have prevented more than £775 million from being lost through error and fraud in the COVID-19 financial support schemes, and as of July 2022, the total amount of money HMRC have either blocked from being paid out or recovered through compliance work sits at more than £1.2 billion, with compliance activity still ongoing.

In addition to this figure, customers have made unprompted decisions to repay £970m, either because they decided they no longer needed the money claimed, even though they were entitled to it, or because they recognised an error and returned the money.

Taxpayer Protection Taskforce

The government has invested over £100 million in a Taxpayer Protection Taskforce to combat fraud in the HMRC-administered Covid-19 schemes. To the end of March 2022, they have opened nearly 41,000 one- to-one compliance interventions and contacted over 63,000 people via one-to- many campaigns.

Error and fraud estimates

The most likely estimate for the value of error and fraud in the Coronavirus Job Retention Scheme, the Self-Employment Income Support Scheme and Eat Out to Help Out during 2020 to 2021 is now £3.9 billion, down from the previously published most likely estimate of £5.8 billion, being a rate of error and fraud in the schemes of 4.8%.

For the Coronavirus Job Retention Scheme specifically, new data from the Random Enquiry Programme and compliance cases shows that the overall level of error and fraud is down, and the proportion attributed to error is higher. HMRC also found the value of error and fraud in claims made by individual employers is generally low.

What have we seen?

The above partly reflects what we have seen from reviews of businesses, in as much as the error rate is high, but the net position in relation to overclaims is very low, in fact in most cases the errors result in net underclaims, which are now lost unfortunately.

Despite businesses’ best efforts to keep up with the changes to the CJRS, our reviews of claims have seen errors covering:

• Inability to evidence the correct reference pay
• Use of incorrect reference pay
• Lack of or poor documenting of the furlough consultation and ‘agreements’
• Breaching the daily claim limit caps
• Apportionment on the wrong basis i.e. payroll based on paydays and furlough based on calendar days
• Miscalculation of NIC claims, based on pro-rata of total for pay period, not NIC just on furlough pay
• Miscalculations of Pension claims
• SMP above the Statutory Pay incorrectly treated
• Not identifying ‘full’ furlough and ‘flexi-furlough’ from July onwards and so using incorrect claim parameters
• Confusion of overlapping pay and claim periods and amounts able to be recovered

Our risk-based approach is a simple 3 step process:

1. Review and update to your reference pay calculations as necessary
2. Review the March – June 2020 calculations including NIC and Pensions
3. Apply the revised calculations to all periods to form a recalculation

Get in touch

If you have any queries in relation to the above or would like to discuss how a proactive review of your historic claims can provide comfort in relation to potential HMRC reclaims and provide certainty in light of the substantial HMRC activity in this are please get in touch with our experts using our online enquiry form