Date: October 2020
Samantha Mann, policy and research technical lead at the CIPP and a member of the IReeN committee, discusses what action is needed as the Coronavirus Job Retention Scheme draws to a close.
Even allowing for the surprise u-turn from the Chancellor of the Exchequer on Friday 9 October 2020 which announced an extension to the Coronavirus Job Support Scheme that will be available for businesses that have to been told to close due to coronavirus restrictions (“we will do whatever it takes”) we are still facing the end of the Coronavirus Job Retention Scheme (CJRS) on 31 October 2020.
Claims must be made for the CJRS – flexible furlough element – by the 30 November.
Robust and accurate record keeping is the key, but knowing how under pressure payroll professionals have been throughout this last seven months, now is the time to review and audit your records, whilst all remains fresh in your mind. There is time to make corrections before penalty provisions come into force.
Since the beginning, there has been a requirement for employers to reach agreement with their employees as to the change to employment terms, whether that be a single period of furlough for three weeks, or longer. This agreement, once reached, needs to have been confirmed in writing with the employer issuing a copy to the employee, in writing or by email, and retaining a copy for their records for a period of five years.
When flexible furlough came in from 1 July, which permitted an employer to bring an employee back in to work, on any shift pattern or agreed hours, this too would have resulted in the need for a further written agreement. Again, the letter was to be issued to the employee with a copy retained by the employer for a period of five years. If any subsequent changes were needed, this would require the issue of further written confirmation.
On a separate note, this written confirmation and record keeping requirement continues with CJRS.
Records that relate to pay and claims however need to be retained for six years.
If you have received a letter from HMRC because they have reason to believe that you may have made an incorrect or fraudulent claim, do not ignore it, take action to review your records and if an error is found, make corrections.
If you are certain that no such error or inaccuracy exists, contact HMRC to discuss, you may be able to provide the missing nugget of information to HMRC to resolve this query.
Six years is a long time to remember details and reasons for action taken during these last few manic months, now is the time to gather together evidence, and records so as to ensure you protect your employer against future compliance inspections.
Possible errors made with CJRS include, including pay elements that are not permitted such as benefits in kind; calculating usual hours by using working days, which is the normal payroll process, not calendar days as prescribed by HMRC; failing to pay top ups for training hours are just some of the many errors that have been revealed over recent months and there will be many more – how certain are you of your processes, calculations and record keeping?
We have had many reports that the 31 July claim deadline was missed – don’t risk missing the 30 November. As with the 31 July, it is tight, we know that many practitioners have held back from making their claims for a month (where cash flow permits) so as to ensure that any final pay adjustments have been captured within the claim.
Reports from employees that their employer has asked them to work, whilst on a period of furlough, may be accurate but this isn’t something that payroll would necessarily know about – do you have a process by which to check this?
The message from HMRC continues to be clear:
“Where people have made an honest mistake, we want to help people correct them. No one who has tried to do the right thing but made an honest mistake has any need to be concerned, as long as they put it right.”
However, and as confirmed by CEO Jim Harra “we will be asking anyone who’s got information about the scheme being abused to let us know and there is an online hotline service for any employee who feels they are being asked to be complicit in something they don’t want to be complicit in to contact us and let us know……”
Finance Act 2020
Makes provision for the taxation of Coronavirus support payments which includes – CJRS, SEISS, SSP rebate and indeed any other scheme that is subject of a Direction given under section 76 of the Coronavirus Act 2020.
The Act enables HMRC to recover any CJRS grants for which the recipient was not entitled, and which has not been repaid. It does this by imposing an income tax charge equivalent to 100% of the grant. Employers then have 90 days from 22 July 2020 or when the income tax became chargeable (whichever is the later), to notify HMRC of any sums received under the CJRS to which it was not entitled. Failure to notify also risks incurring a penalty of up to 100% of the amount overclaimed.
Employees are being encouraged to report suspected or known fraudulent behaviour, via the HMRC online hotline, and this, together with data that HMRC is able to reference, such as RTI data, means that it is vital that employers take steps to protect against or rebuff such claims.
Guidance has been subject to constant change and you would be forgiven for overlooking one or two of the iterations, if that is the case the archive of guidance is available: