Flexible furlough

The Coronavirus Job Retention Scheme (CJRS) has supported a total of 11.7 million jobs at various times from 1.3 million employers at a cost of £70bn. Furloughed employees had to receive 80 per cent of their pre-furlough reference salary up to a maximum of £2,500 per month.

What is the price of getting CJRS wrong?

• Legislation allows for a 100 per cent tax charge on incorrect claims not returned or reported to HMRC in a set timescale plus penalties.
• HMRC will consider criminal prosecution with penalties of up to 10 years in prison for fraudulent claims.
• HMRC audits requiring records retention for six years (the furlough agreement for five years or until 30 June 2025).
• Auditors, shareholders, audit committees, directors, trustees or pensions trustees will require assurance that CJRS claims and associated payments are correct.

What are some common CJRS mistakes?

• Furlough agreements unfit for purpose.
• Employees only on furlough leave whilst on holiday.
• Calling furloughed employees back to work for emergencies without claims adjustment.
• Employers expecting CJRS to fund all redundancy costs including PILONs.
• Invalid earlier furlough period preventing furlough claims after 1 July.
• Incorrect calculations resulting in for example underpayments to employees’ pensions funds.
• Making employees settlement offers on termination through extending notice periods served on furlough.

How can RSM help?

① Furlough agreements compliance review.

② Support to ensure employment terms changes including pay reductions during furlough were effective.

③ Holiday planning to meet both CJRS claims and annual leave requirements.

④ Assistance with claims, reviews and correction reporting to HMRC.

⑤ Reviewing that furlough procedures supported the claim requirements.

⑥ Assistance with making sure all parties were paid the correct amounts including reference salary correctly calculated and employees' pay and pensions schemes deduction were correct.

⑦ Redundancy costs structuring using CJRS support was correctly applied.

For more information, please contact Carolyn Brown, Susan Ball and Charlie Barnes.