Income Tax charge to recover CJRS overclaims
06/01/2021

Employers should notify HMRC if they have received a CJRS payment to which they are not entitled and pay back any amounts of CJRS grants claimed in error. By paying back any amounts they were not entitled to, employers can avoid any tax liability for overclaimed CJRS grants. Failure to do so within the stated notification period will be treated as deliberate and concealed conduct. This can result in penalties of up to 100% of the CJRS grant that the employer was not entitled to.

HMRC also has the power to recover the full amount of an overclaimed CJRS grant by imposing an Income Tax charge equal to 100% of the payment to which the employer was not entitled using a tax assessment. The Income Tax charge also applies to companies. This action will only be taken for amounts that have not been repaid to HMRC.

The assessment can include:

  • any amounts not used to pay furloughed employees’ wages
  • related costs within a reasonable period

Employers must pay the amount due within 30 days of the assessment. HMRC can charge interest on any late payments and may also charge late payment penalties if the amount is still not paid 31 days after the due date.

If a company is insolvent and HMRC cannot recover the tax it owes, company officers can become personally liable to pay the tax charged on their companies’ overclaimed CJRS grants.


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