The Finance Act 2020 (Act) came into force on 22 July 2020 and contains new measures to ensure that Covid-19 support payments can be clawed back where they were should not have been claimed.
The Act applies to support payments under the UK Government schemes including the Coronavirus Job Retention Scheme, the self-employment income support scheme, the coronavirus statutory sick pay rebate scheme, and the coronavirus business support grant scheme.
The Act imposes a tax liability at a rate of 100% for those who received Government support which they were not entitled to receive, meaning those payments can be clawed back in full. The clawback will apply to those schemes that were deliberately abused as well as for genuine errors.
Inevitably, the Government support schemes have given rise to concerns that some payments have been wrongly claimed, whether genuine mistakes or deliberate.
To resolve this, the Act includes civil penalties and HMRC will have the power to recover payments together with penalties and fines in more serious circumstances.
In order to investigate allegations of fraud, HMRC have been given a wide range of powers; however, HMRC have confirmed that they will be lenient in circumstances were genuine mistakes have been made.
Under the Act, businesses that are liable to repay a grant to which they are not entitled must notify HMRC within 90 days of the Act being passed or the date on which the charge arises, whichever is later. Therefore, it would be beneficial for businesses to review claims and notify HMRC setting out any genuine mistake clearly, accurately and persuasively to ensure heavy penalties or fines are not enforced.
If you are concerned about any support you have received during the pandemic, please contact a member of our team who will be able to advise.
On 22 July 2020, the Finance Bill 2020 received Royal Assent and became law.