Correcting CJRS claims

It was discussed whether employers should claim the Employment Allowance, worth up to £4,000, in addition to making CJRS claims, on 11 June and 13 August 2020.

Some employers made CJRS claims for the periods to 31 July and didn’t include an amount for employer’s NIC in those claims. For periods from 1 August onwards the employer’s NIC liability can’t be included in CJRS claims.

Now all employers should review their likely class 1 NIC liability for the whole of 2020/21 including any covered by CJRS claims and take action according to that total, as follows:

1. Employer’s NIC is less than £4,000 Claim the Employment Allowance for 2020/21 and amend the CJRS claims to remove any employer’s NIC included in those claims.
   
   
2. Employer’s NIC not included in CJRS claim is more than £4,000 Claim the Employment Allowance for 2020/21. The CJRS claims do not have to be amended as the total secondary class 1 NIC for the whole tax year exceeds the sum of the NIC element of the CJRS claim plus the NIC due outside of the CJRS claims.
   
   The employer has not overclaimed under CJRS, considering the tax year as a whole.
   
   
3. Employer’s NIC not included in CJRS claim is less than £4,000 Estimate how much of the Employment Allowance covers secondary class 1 NIC included within the CJRS claims, and then deduct this amount from either:

• their CJRS claims; or
• the 2020/21 claim for Employment Allowance.

It is probably easier to reduce the CJRS claims and repay the difference to HMRC (or reduce the next CJRS claim) than to try to convince HMRC that the Employment Allowance can be claimed in part.

The final CJRS claim for October 2020 must be submitted by 30 November 2020. The new job support scheme (JSS) has a different mechanism and amounts overclaimed under the CJRS cannot be set-off against JSS claims.

If there are no further CJRS claims to submit you should contact HMRC to get a payment reference number to repay the overclaimed amount. This can be done by webchat or telephone: 0800 024 1222. HMRC provide guidance on how to repay the excess grant electronically, payment by cheque is not an option.

Don’t delay telling HMRC about an adjustment to an earlier CJRS claim, as penalties can apply if that notification is not made within 90 days of the point the employer knew there was an error in the claim.

ICAEW guidance on Employment Allowance and CJRS

"This information is taken from the weekly Tax Tips, published by the Tax Advice Network, for which you can subscribe at www.TaxAdviceNetwork.co.uk