Furlough – the end is near
Wednesday, 09 June 2021
As the Government’s roadmap out of lockdown is in its final stages, and many businesses are slowly getting back to pre-pandemic activity levels, we look at the remaining four months of the Government’s Coronavirus Job Retention Scheme (CJRS), more affectionately known as furlough, and considerations as the scheme comes to a close.
As we saw last summer, the level of support from the Government is going to wind down. The current level of 80% support continues to 30 June, then businesses are being asked to contribute 10% in July and 20% in August and September (with the Government making up the other 70% and 60% respectively).
It is very unlikely that this is the last we will hear of furlough over the coming months and years, as the Government has announced in the latest budget £100 million will be invested to investigate errors and fraud. Almost 26,000 investigations have already happened almost entirely due to employee’s whistleblowing on their employers. Employers and agents are starting to see 20-page letters sent from HMRC requesting information on employers’ furlough calculations, Real Time Information (RTI) submissions and employee details with only a 2-week deadline to collate it all. Anyone who thinks they have calculated furlough incorrectly should re-visit the calculations and repay any overclaim as soon as possible.
Penalties can be issued by HMRC for up to 100%, if the overpayment was considered ‘deliberate and concealed’, so businesses would be well-advised to pre-empt an HMRC investigation and review their own position as soon as possible. Should you need assistance with this, please let us know.
HMRC have indicated that they may ask for proof that furlough has been used correctly and because ‘employment activities have been adversely impacted by the coronavirus’ not for some other reason i.e. to cover leave or a natural downturn in production. HMRC may ask for proof i.e. closure information or accounts showing a decline in sales to make sure any use of furlough can be backed up. With the scheme being so complicated and guidance in the first few months changing weekly, if not daily, it’s going to be inevitable some mistakes have been made by employers – it’s down to how well these companies work with HMRC to try and rectify the situation that will fall in their favour.
Take away points for businesses using the scheme:
- Make sure you are adjusting calculations for the reduction in Government contribution from June onwards
- Make sure any use of the scheme can be backed up by evidence and is still appropriate
- Reply to any HMRC letters within the specified deadline – this could be as tight as two weeks
Please get in touch with your usual contact if you would like any further information or assistance with the CJRS scheme. You can find contact details on the Our People section of the Larking Gowen website. Alternatively, call 0330 024 0888 or email firstname.lastname@example.org