Budget 2021: Coronavirus job retention scheme (CJRS) extension

The coronavirus job retention scheme (CJRS) has protected more than 11 million jobs since its inception last March and has now been extended to September 2021.

Whilst it is good news that the scheme has been extended, employers will now be expected to contribute 10 per cent towards the pay relating to the hours their staff do not work in July, increasing to 20 per cent in August and September, as the economy reopens.

For periods starting on or after 1 May 2021, employers can claim for employees who were fully employed on 2 March 2021, as long as they have made a PAYE real time information (RTI) submission to HMRC between 20 March 2020 and 2 March 2021 notifying a payment of earnings for that employee. Employers do not need to have previously claimed for an employee before the 2 March 2021 to make a claim for periods starting on or after 1 May 2021.

Details of how to calculate claims for periods starting on or after 1 May 2021 will be provided in updated guidance in due course.

In summary CJRS Version 4:

  • 1 May to 30 June 2021 - the maximum grant for furloughed hours is 80 per cent of a furloughed employee’s wages (the reference pay, as defined in the legislation) up to a cap of £2,500 per person per month.
  • 1 July 2021 to 31 July 2021 - the Government grant is 70 per cent and the employer   must fund 10 per cent of furloughed employees’ wages during furlough periods.
  • 1 August to 30 September 2021 - the Government grant is 60 per cent and the employer must fund 20 per cent. 
  • The employer is required to continue to contribute ER NICs and employer’s pension contributions.

What is HMRC doing to check claims?

In the Treasury select committee hearing on 7 December 2020, there were some rather interesting statistics on the coronavirus support schemes. Approximately £12m of claims relating to the CJRS had been rejected by HMRC, which had also undertaken further reviews into 140,000 submissions prior to approving payment by the time of the hearing. HMRC's view is this approach has rejected most suspect claims, believing that the level of criminal activity for the CJRS is low, at between 0 per cent and 0.6 per cent.

As this demonstrates, HMRC is investigating claims and several arrests for fraud have been made at the time of writing. HMRC has also written to large numbers of employers to invite them to correct any claims which, based on the data HMRC holds, may be incorrect. Where employers have not responded to these letters, further investigations are being started by HMRC.

In the Budget the Chancellor announced that the Government will invest over £100mn in a taxpayer protection taskforce of 1,265 HMRC staff to combat fraud within coronavirus business support packages, including the CJRS and self-employment income support scheme (SEISS), representing one of the largest responses to a fraud risk by HMRC. So we would encourage employers, if they haven’t already done so, to review previous claims and make sure they are correct.

Don’t forget that HMRC can now require employers to provide information regarding incorrect claims and, where appropriate, can hold directors personally liable for the tax where the business is no longer solvent. Where businesses have received wrongly claimed CJRS payments, those payments are taxable at a rate of 100 per cent, allowing HMRC to recover the payment through tax.

The legislation also imposes a burden on employers, in a similar manner to the Bribery Act 2010, to notify HMRC of any amounts that have been wrongly claimed to avoid penalties.

A 90-day amnesty period, or ‘correction window’ was included for employers to make such notifications. The correction window is prescribed as the latest of:

  • 90 days from the receipt of the grant;
  • 90 days from circumstances changing meaning the employer is no longer entitled to retain the grant; or
  • 20 October 2020.

Each employer that has received a CJRS grant payment now has the positive duty to notify any wrongly received amount and self-assess that amount in their tax return. Any failure to notify wrongly received amounts by the above deadline could be subject to penalty (in addition to the tax charge).

Where an employer does not meet the above notification deadline and where they knew that they were not entitled to receive grant monies at the date income tax first became chargeable, any such penalty may be imposed on the basis that the wrongdoing was ‘deliberate and concealed’, meaning a maximum potential penalty of 100 per cent of the amount improperly claimed.

For the most serious cases, criminal prosecutions are likely and there are a number of (statutory and common law) offences that may be relevant, including the strict liability corporate criminal offences under the Criminal Finances Act 2017.

For more information please contact

Susan Ball Susan Ball


Carolyn Brown Carolyn Brown

Partner, Head of Client Legal Services