A 100% income tax charge can be imposed where a recipient of a support payment was not entitled to it.
This charge covers scenarios such as Coronavirus Job Retention Scheme (furlough) claims where the employees concerned were still working, and also incorrect claims of Self Employed Income Support Scheme, for example where the business was not ‘adversely affected’ by coronavirus. The provision does not apply to business support grants and the statutory sick pay scheme.
When a person is liable to a charge, they are required to notify liability by 90 days after Royal Assent (meaning 20 October), or 90 days after the liability arose if later. This will then trigger a late notification penalty if notice has not been given. The existing penalty for failure to notify will apply to late notification.
Where a person knows that the support payment is one to which they are not entitled, and fails to notify HM Revenue & Customs of the liability to tax by the time limit, this will be treated as a deliberate and concealed failure to notify, liable to a penalty of 100%. The related potential lost revenue for this purpose is the whole of the tax charge – that is the full amount of the payment.
Finally, officers of a company could be made jointly and severally liable for the tax which might become unpaid. A liability notice is restricted to individuals who were responsible for the management of the company at the time the income tax became chargeable, and who knew (at the time) that the company was not entitled to the coronavirus support payment to which the tax charge relates.