Karen Foster, Tax Director / Global Employer Services at BDO writes for MAD-HR about the importance of double checking CJRS claims made by your business to HMRC.
Up to now, HMRC have targeted their resources on checking claims under the Coronavirus Job Retention Scheme (CJRS) where they believed there was an indication of fraudulent claims being made. However, recent activity suggests they are now turning their attention to a wider review of claims, including business types whose profile contains known risk areas.
Our experience suggests, not surprisingly, that many businesses implemented claims in a rush at the start of lockdown and made their best effort at the time to get to grips with the complicated rules. But this is one occasion when a cautious approach to the amount claimed might not have served the businesses well.
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A key principle of the furlough scheme was that an employee should receive 80% of their regular wages. Where an employer faced with two possible versions of the CJRS calculation, opted to claim the lower amount and paid this to their employee, there is a risk the employee was underpaid. If no action has been taken to make good such shortfalls in payments to employees, the worst-case scenario is that HMRC may strike out the employer’s CJRS claim as invalid and demand repayment.
Of course, many other types of mistakes were made with CJRS claims. We are therefore recommending that employers take the initiative now to revisit the claims to check (and double-check) that the amounts they claimed were correct. Making sure the paperwork is accurate and government guidelines were adhered to is key to protecting your business.
HMRC have created a facility to allow businesses to pay back CJRS over-claimed and if you use this to fully correct any errors that you find, there is no need to make a separate formal disclosure to HMRC.
We are already seeing business sale situations where concern over past CJRS claims is the highest value risk identified during a due diligence review of the company’s employment costs. So we expect the topic of furlough to be high on the agenda for businesses that might be considering a potential sale or purchase in the short to medium term.
BDO offers a CJRS Risk Review Tool which analyses your organisation’s overall exposure to risk, and a CJRS Claims Review Service to help you identify and quantify errors so do please get in touch if you want to review past claims and gain peace of mind.
For help and advice on resolving your CJRS position once and for all, please contact firstname.lastname@example.org.
Article by Karen Foster, Tax Director / Global Employer Services at BDO.