The UK government’s Eat Out to Help Out Scheme was one of the summer’s highlights for companies, providing much-needed help to businesses struggling to remain afloat in the aftermath of the Covid-19 crisis.
HMRC, on the other hand, has said that it will assess and possibly investigate allegations made by up to 4,000 firms.
We have the skills and understanding in corporate tax and litigation to help you and perhaps minimise any difficulties or errors if your company is examined by HMRC in respect to Eat Out to Help Out.
We provide the following services:
- The most up-to-date legal advice on company tax relief and any claims you may be eligible for as a result of the continuing coronavirus epidemic.
- Solicitors with expertise working with HMRC who are practical and cost-effective.
- A small, friendly staff devoted to providing you with a high-quality service.
What should you do if you receive a letter from HMRC?
Before HMRC begins a formal compliance review, claimants have 30 days to respond to the notice.
Companies must evaluate their financial records to confirm that they not only have satisfied the necessary qualifying standards but also claimed just what they were entitled to.
Correcting the Errors in the Eat Out to Help Out program
If you were ignorant that you had claimed too much at the time and responded fast, you may be able to avoid any extra costs or penalties by returning the money you overpaid within the time limit.
By January 31, 2022, sole traders or partners must refund the funds. This period concludes 12 months after the conclusion of a company’s accounting period.
If you discover an error, you must notify HMRC within 90 days of receiving the money that was incorrectly claimed.
How will HMRC recoup overpayments?
To collect the entire amount of an overclaimed payment, HMRC will issue a tax assessment.
Any sum assessed by HMRC must be paid within 30 days of notification, with late payments subject to interest and penalties. If HMRC suspects a company of attempting to hide an inaccurate claim, a penalty of up to 100% of the Eat Out to Help Out payment may be imposed.
If HMRC hasn’t made an assessment, that doesn’t imply you don’t have to reimburse them. The specifics of the overpaid funds must be notified to HMRC either on the tax return or in writing.
Partnerships
HMRC will try to recover income tax on an overclaimed Eat Out to Help Out payment paid to a partnership. It has the ability to evaluate any of the partners.
The partners will thereafter be responsible for the assessed sum. If the partnership does not refund the sum and no assessment is given, one of the partners must add the Income Tax charge on their self-assessment tax return for the years 2020 to 2021. This sum will not need to be self-assessed by the other partners.
Companies that are bankrupt
If the company goes bankrupt and the taxes cannot be retrieved, the directors may be held accountable for any overpayments.
This may happen if the director was aware of the following:
The claim was either not used for the stated purpose, or the firm had over-claimed an Eat Out to Help Out payment when it was received.
So far, HMRC’s strategy has been
If a company is fined for submitting an erroneous claim on purpose, HMRC may publish the company’s information on a list of defaulters.
HMRC will contact anyone who has been penalized for making improper payments to explain how the decision was reached. Businesses that want to appeal must do so within 30 days after receiving the notification.
In addition to the serious legal ramifications, being probed may be extremely damaging to a company’s reputation. For example, charges that one of Papa John’s pizza franchisees made considerable improper claims under the Eat Out to Help Out Scheme recently received some unwanted news.
In short, HMRC is cracking down on businesses that may have made false claims or kept inadequate records while receiving financial assistance during the epidemic.
