Are you prepared for a Coronavirus Job Retention Scheme Audit?
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In April 2020, the government’s CJRS portal went live. It allowed businesses and organisations to apply for grants worth 80% of salary (up to £2,500 monthly) for furloughed staff. Although employers are rightly focused on getting through the pandemic crisis, it’s essential to make sure all claims are valid. HMRC may later conduct a Coronavirus Job Retention Scheme Audit on your organisation. It will at the very least ask you to pay back wrongly-claimed grants.
So how do you make sure your CJRS claims are valid? In this post we’ve put together some advice and flagged up potential pitfalls.
Read the government guidance on CJRS claims carefully
In fairness, the CJRS scheme’s guidance is straightforward (certainly by HMRC standards). In the main, if you are a UK business, you can furlough employees and make a claim as long as you:
- Started a PAYE payroll scheme before 19 March 2020 (note the new date)
- Are enrolled for PAYE online
- Have a UK bank account.
So far, so good. But before you claim for any employee, it’s vital you double check they are eligible under the scheme.
Check CJRS eligibility criteria
Some of the key things to note are:
- Terms of the furlough. Furloughed employees “cannot undertake work for, or on behalf, of the organisation or any linked or associated organisation. This includes providing services or generating revenue.”
- Timing of a person’s employment. You can only claim for people you employed on or before 19 March and who were on your payroll by that date. You can re-employ people who stopped working for you (or who were made redundant) after 28 February and put them on furlough.
- Conditions of a person’s contract. You can re-employ and furlough people who were on fixed-term contracts. You can do this if either (a) their contract expired after 28 February 2020 and an RTI payment submission for the employee was notified to HMRC on or before 28 February 2020 or (b) their contract expired after 19 March 2020 and an RTI payment submission for the employee was notified to HMRC on or before 19 March 2020
Other conditions apply to – for example – employees who are working reduced hours, are on unpaid leave, are self-isolating or on sick leave. Full guidance is here, but the key point is that you need to ensure you are making accurate, valid claims.
Watch out for elephant traps!
As always, problems creep in where the official advice is the vaguest. One condition we suggest you pay close attention to is this:
Where employers receive public funding for staff costs, and that funding is continuing, we expect employers to use that money to continue to pay staff in the usual fashion – and correspondingly not furlough them. This also applies to non-public sector employers who receive public funding for staff costs.
This is of particular importance to organisations such as ‘early years’ providers and care homes, many of which will receive a mixture of public and private funds. In some cases, there is additional guidance available, such as this page aimed at the early years and childcare sector. This advises that, where certain public funding is reduced, providers can increase the proportion of what they claim via CJRS:
Any setting which sees their early entitlement funding reduced in order to fund childcare places elsewhere will be able to increase the proportion of their salary bill eligible for the Coronavirus Job Retention Scheme in line with DfE’s guidance on access to the scheme.
If your organisation receives mixed public / private funding, we strongly recommend you talk to us. It would be all too easy to wrongly furlough employees and face a large bill for repayment after any Coronavirus Job Retention Scheme Audit.
Use a Coronavirus Job Retention Scheme audit checklist
Having your records in order is essential, especially if HMRC comes knocking in future months or years. There is a very useful Coronavirus Job Retention Scheme Audit Checklist published by ProActivTax, which is currently available here.
The document is very detailed, so you may find it simpler to ask us to help create a checklist that is tailored to your organisation. Please ask if you think that this would help you.
Key take-away: be prepared
If you are claiming grants under CJRS, the key point is to check at all stages that both your organisation and your employees are eligible for the scheme. While CJRS is a relatively simple scheme, there are pitfalls that could cause trouble after any future Coronavirus Job Retention Scheme Audit.
About Samantha Rowe
Sam’s title is Operations Manager, but the title itself doesn’t truly convey the variety of what she does for THP. From administrative tasks to payroll, strategic business planning, and office systems and procedures, Sam’s primary skill lies in multitasking.
Sam’s journey began as an office junior with George Nottage (now merged with THP), and she soon learned skills in payroll and bookkeeping, and then gained experience as a PA to the Directors, and as Administration Manager.
At the moment, Auto Enrolment is an area that has a key focus for Sam, and for THP as a whole. “The question I’m asked the most by clients just now is, ‘How will auto enrolment affect me?’ And the answer is, no matter how big or small you are, you will absolutely be affected by the Auto Enrolment regulations. I’d encourage you to start thinking about it now, and to look at your payroll software to make sure you’re ready.”