Employers Beware! Potential Consequences of Deferring PAYE When Making Claims Through the Coronavirus Job Retention Scheme

HMRC have changed their approach in relation to Coronavirus Job Retention Scheme (CJRS) claims in situations where an employer has made arrangements with HMRC to defer their PAYE payment obligations.

Salary costs which have been wholly or partly reimbursed through the CJRS will NOT be eligible for deferral under the terms of any agreement made previously.  The deferral arrangements can continue in relation to employees that have not been furloughed.

We understand that these changes only apply to PAYE obligations arising on or after 22 May 2020 and previous claims should not be challenged.

Failure to meet PAYE obligations in respect of furloughed staff might result in HMRC withholding CJRS grants.  Furthermore this could be regarded by HMRC as a payment default, potentially subject to penalties.

It is therefore essential that any employers who wish to claim a CJRS grant for furloughed staff continue to meet their PAYE obligations on the grant payments.

The information in this blog provides only an overview of HMRC guidance and legislation in force at the date of publication and no action should be taken without consulting the detailed HMRC guidance and legislation or seeking professional advice.  Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this blog can be accepted by the firm