Correcting Coronavirus Job Retention Scheme claims

The Coronavirus Job Retention Scheme came to an end on 30 September 2021 but HMRC's compliance activity is continuing. 

UPDATE 4 August 2022  - This article has been updated to incorporate updates to the final section 'Further guidance and interaction with obligations under PCRT' to provide a new link to the PCRT guidance and HMRC's Q&A on common errors. 

Last updated 14 October 2021

Ensuring that Coronavirus Job Retention Scheme (CJRS) claims were complete and accurate was a challenge for employers and their agents alike. While the pace of change in respect of guidance slowed after the initial months of the scheme in 2020, from 1 November 2020 claimants faced a much shorter time frame (14 days from the end of the month) to get claims in. It is inevitable therefore that some claims will contain mistakes which will need to be corrected. This article looks at how to correct claims and the potential penalty landscape where mistakes are not corrected.

We are very grateful to HMRC for commenting on the original version of this note (published February 2021) prior to publication.

Amending current claims

For over-claims from 1 November 2020 onwards which are spotted quickly, employers had 28 days from the end of the month of the claim (unless this falls on a weekend or bank holiday, in which case it was the next working day) to make any corrections via the usual claims portal. The amendment window for the final claim month of September 2021 closes on 28 October 2021 and outside of that window, if an over-claim is spotted further steps will be needed as explained in this article.

From 1 November 2021, any under-claims could only be corrected in that 28-day window. The deadline for increasing claims for the versions of the scheme in operation up to 30 September 2021 expires on 28 October 2021.

The remainder of this article concerns how to tackle over-claims.

Why might an over-claim arise?

There are a number of reasons why mistakes might arise, particularly in claims in the early months of the scheme in 2020, where employers were working under significant pressure and guidance was being updated very rapidly.

Examples might include:

  • Failure to appreciate changes in guidance (see below for more detail)
  • Basing calculations on weeks rather than days
  • Using the wrong basis for an employee’s usual pay.
  • Taking account of pay rises from 19 March 2020 (the National Minimum Wage was increased from 1 April 2020) when usual pay in many cases should have been based on pre 19 March 2020 figures for employees in work on or before that date.
  • Claiming for the ‘top up’ amount where employers topped employees up to 100% of their usual salary, when support was only intended for up to 80% of salary (subject to a monthly cap)
  • Treating a pre-salary sacrifice position as the reference point for salary
  • Including non-contractual bonuses in employee’s reference pay
  • Miscalculating an employee’s usual hours when flexibly furloughed from 1 July 2020
  • Failing to pay out the grant to employees either at all, or within a reasonable period of time
  • Including ineligible staff in claims– for example staff who had left, or for whom an RTI had not been filed by the relevant deadline (this date will vary depending on the relevant version of the scheme).


The other area we (in conjunction with other professional bodies) have been exploring with HMRC is when (or indeed if) compensating errors could be offset from 1 November 2020, when the different deadlines for correcting under and overpayments were introduced. 

HMRC have now updated their guidance to confirm that where errors have resulted in both under-claims on some employees and over-claims on others within a given claim period it is possible to net those errors off. Only any resulting over-claim needs to be repaid. It is important to appreciate that no such offsetting is permitted if the errors arose in different claim periods.

HMRC compliance activity 

HMRC started compliance activity in earnest in August 2020 when they issued a number of letters to employers that they identified as at high risk of having made errors.  At this point it was expected that the CJRS would be coming to an end and that HMRC would be moving into the post-transaction review phase. In fact the CJRS was extended until 30 September 2021, but HMRC continued with a range of targeted approaches which we expect will continue for some time beyond the end of the CJRS itself.

For those anxious about having made genuine mistakes under pressure, it might be reassuring to know that throughout their compliance phase HMRC have been concentrating their activity on those who they believe may have been abusing the system and making fraudulent claims. HMRC appreciate that this was a challenging period for all concerned and say they that they will not be actively looking for cases where the employer has simply made an innocent error. That does not, however, remove the obligation to report a mistake once one has been identified.

The guidance also warns that, where an employer identifies an under-claim, they should take steps to correct any underpayment made to the employee, as failure to pay a minimum of 80% of ‘reference pay’ would lead to the claim for that employee being invalidated.  

A longer article on the topic of offsetting can be found on AccountingWEB.

HMRC ‘Nudge’ Letters

As part of their compliance activity, HMRC have in issued a number of ‘nudge’ letters asking employers to check their CJRS claims. Concerns were raised with us regarding the scale of the work required in some cases to check large numbers of individual calculations. Some agents reported to us that they felt that, without knowing what HMRC was looking for, they were potentially looking for a needle in a haystack. Requests to HMRC for some indication of the reason behind the nudge letter have not always provided significant answers.  

This is a difficult area for HMRC to negotiate. They have been very careful not to explain the basis of any concern as doing so could mean that any resulting disclosure by an employer had to be categorised as ‘prompted’. Following an approach by ATT, HMRC has now shared the following update with us which members may find helpful when considering what work is required in order to respond to one of these nudge letters.

“In line with our strategy we want to help customers to get things right.  The CJRS letter is aimed to nudge customers to look again at their claims. The areas which would raise concerns include

  • Whether the overall claim looks larger than we would expect based on previous filings
  • Whether the number of employees and the type of employees claimed for appears credible
  • Whether the pattern of RTI filings and claims is broadly in line with what we would expect.”

This suggests that before considering detailed line-by-line work, anyone reviewing a CJRS claim might first want to stand back and look more holistically at the claim for substantial errors – checking the wood before the trees so to speak.


The specific legislation to recover any overpaid CJRS claims can be found in schedule 16 of Finance Act 2020.

In brief, a charge to income tax arises when the employer has claimed an amount of CJRS to which they are not entitled. The charge is equal to 100% of the amount of over-claimed grant which has not already been repaid – i.e.. it is designed to achieve full repayment.

The tax liability arising in this way becomes chargeable at the time the CJRS payment is received - unless the employer ceased to be eligible for the relevant element of their CJRS claim at some later date. Where that is the case, the tax becomes chargeable at the date that their circumstances and eligibility changed. That might apply for example if an employee had worked more hours than anticipated.   

For those within income tax, the charge can be included as part of the income tax computation.

For a company, the charge is added onto corporation tax calculation in the final step when establishing the final tax liability. Whilst the charge can be self-assessed as part of the corporation tax process, it remains a stand-alone income tax charge, and HMRC will raise a separate income tax charge for this amount so that any payment can be allocated against this charge and not the corporation tax liability for the accounting period. New boxes have been added to the CT600 to report overpayments. 

HMRC Assessments

HMRC have power to raise an assessment for the amount they consider to have been over-claimed.

The usual time limits from s34 and s36 of TMA 1970 apply, with HMRC able to raise an assessment within four years following the year of assessment in which the over-claim arose unless the taxpayer’s behaviour was careless or deliberate – in which case extended time limits apply.

HMRC advise that they will issue an assessment where they identify an error that has not been notified and also for amounts notified but not then repaid within 30 days if the customer has not agreed time to pay arrangements. HMRC have confirmed to us that the raising of an assessment for notified amounts not paid within 30 days isn’t automatic process and that HMRC will allow taxpayers reasonable time to pay if they cannot do so within 30 days. Generally, assessments will be raised in cases where the taxpayer doesn’t engage or fails to make payments as agreed.

Notification of liability

For the employer, it is not simply a case of paying back any over-payments identified. An employer is also required to notify HMRC that the overpayment has arisen within specific time-limits. Penalties can be charged for failing to notify.

The notification deadline is the later of

  • 90 days from the date that the over-claim arose; or
  • 20 October 2020 (this is 90 days after Finance Act 2020 gained Royal Assent on 22 July 2020).

In practice, this means that for over-claims arising prior to 22 July 2020, the deadline to notify HMRC was 20 October, and for all other claims it is 90 days from the date of the over-claim.

Penalties for failure to notify

Where an employer fails to notify an over-claim, the penalties will depend on whether or not the employer knew at the date that the tax became chargeable that they were not entitled to it.

Deliberate penalties

Where an employer knew at the relevant date that they had over-claimed, the failure is deemed to be deliberate and concealed, so that the penalty for failure to notify will be equal to 100% of the over-claim. Because the failure is deemed to be deliberate and concealed, the 100% penalty will apply regardless of whether or not the employer had a reasonable excuse for their failure to notify.

This is a harsh penalty – but should only apply when the employer had knowledge of their over-claim at the time and subsequently failed to notify. It should not apply to those who, in good faith, made a mistake and only discovered later that a correction was needed and then took the necessary steps.

Non-deliberate action  

Where the employer did not realise that they had made an over-claim at the time it arose, but subsequently discovered an error and missed the notification deadline, they will fall within the general provisions for failure to notify under schedule 41 of Finance Act 2008.

In these cases, the various penalty ranges will apply depending on whether the late notification was prompted or unprompted and how co-operative with HMRC the taxpayer is. Full details of failure to notify penalties in the context of coronavirus support payments can be found on the HMRC website.

Taxpayers in this position can avoid failure to notify penalties by repaying over-claims in time. The standard schedule 41 provisions base the penalty for failure to notify on the Potential Lost Revenue (PLR) which is measured at the 31 January following the year of assessment (or at 12 months after the end of the accounting period for corporation tax). Repayment of the over-claim by those dates means that the PLR is nil, and so too is the penalty.

In summary, for these situations:

  • Full repayment before the 90-day deadline means that there is no reportable liability and therefore nothing to notify.
  • Actual notification of the amount of over-claim within the 90-day period (regardless of whether full – or indeed any – repayment is made within that timeframe) would fulfil the notification requirement and therefore remove exposure to a failure to notify penalty. 
  • Repayment after the 90-day deadline cannot rectify any lack of notification but, to the extent that any such subsequent repayment is made, that reduces the PLR and therefore the related penalty.

Penalties in practice

In line with the analysis above, HMRC’s CJRS-specific factsheet confirms that they will not charge a failure to notify penalty if the individual did not know they had over claimed a CJRS grant when it was received (or at the point when they subsequently ceased to be entitled) provided it is paid back by:

  • 31 January 2022 for an employer who is an individual or a partner
  • 12 months from the end of the accounting period in which the over claim arose if the employer is a company.

An employer who, on review of their claim identifies a mistake, should therefore be able to avoid penalties for late notification provided that they repay any over-claim within the above time limit.

HMRC’s view is that employers have ample opportunity to reduce the penalty amount to nil, provided that the failure is ‘non-deliberate’ in nature.

Furthermore, where the failure is non-deliberate, the penalty can be reduced to nil where the employer has a reasonable excuse and acts without unreasonable delay after the excuse has ended.

Employer prompted to review by HMRC

HMRC is sending letters to employers to prompt them to review their claims where HMRC considers that there is a risk that an over-claim has been made. It is possible therefore that an employer might receive a prompt after they realise that they need to correct and before they have repaid the over-claim by 31 January 2022 (or company equivalent) deadlines above.

Provided that the over-claimed amount was then fully repaid by the deadline dates of 31 January (or appropriate corporation tax deadline), no failure to notify penalty should arise provided that the employer did not know of the over-claim at the time of its receipt (or change of circumstances).

However, as a matter of good compliance and to conform with PCRT, it will always be important for over-claims to be reported as soon as they are known.

How to repay over-claims and making notifications

There are various mechanism to repay over-claims, and HMRC has a dedicated guidance page which is regularly updated.

If claims are continuing, the first approach is to reduce a subsequent claim for the over-claimed amount.

If claims under the scheme have ceased, then it will be necessary to use the online service to obtain a payment reference number.

The key point for penalties though, where the employer did not have knowledge of the over-claim at the time of receipt, is to repay any over-claim by the 31 January (or company equivalent) so that there is no PLR for the penalty to bite on.

The interaction of guidance and the Treasury Direction

Due to the pace at which the CJRS was introduced, the HMRC guidance upon which employers and their agents relied was published in advance of the formal Treasury Directions which form the legal basis of the scheme. While in most cases the guidance accurately reflected what the Directions contained, there have been some occasions where the two have conflicted.

Where issues may arise is where the guidance was not as prescriptive as the Direction(s) and therefore strictly, it is the text of the Direction that gives the correct amount of the claim. If this differs from the calculation based on the guidance, our understanding is that in these cases HMRC will be prepared to review affected cases and consider whether it is appropriate to request repayment of any over-claim where the guidance was incorrect. Members who have clients in this position should let us know.

Further guidance and interaction with obligations under PCRT

Further guidance on the treatment and corrective action necessary in relation to errors regarding the coronavirus job retention scheme which has been incorporated in PCRT is available here

Over recent months we have been working with HMRC to identify common scenarios in the calculation of CJRS grants, and whether they give rise to errors which require correction. HMRC have now provided us with the attached guidance, which we are sharing on their behalf.