If HMRC has not received notification of the overpayment by the relevant date and considers you knew you were not entitled to your grant, HMRC will treat this as deliberate and concealed behaviour. HMRC will be entitled to charge a penalty of up to 100% of the overpayment that the employer received and could publish your details as a deliberate defaulter.
HMRC will take account of your knowledge at the time of the offence when adjudicating the level of penalty, but unlike with existing inaccuracy penalties, HMRC has no legislative power to offer penalty suspension. Consequently, even entirely innocent errors could potentially result in employers being detrimentally affected if the position is not rectified and robust representations are not made regarding your knowledge of any over claim.
Employers really ought to be testing the accuracy of their claims and making disclosures where appropriate. The importance of framing your disclosure correctly cannot be stressed enough. In cases where HMRC does not accept that the disclosure is complete, it may still charge financial penalties, and even consider criminal prosecution if it determines that the disclosure was knowingly submitted inaccurately.