CJRS, and the importance of compliance
01 March 2021
The CIPP’s policy and research team outlines the issues
Many individuals involved with the process surrounding claims relating to the Coronavirus Job Retention Scheme (CJRS) have been focusing on key elements to the scheme – namely, can their business claim and, if so, which employees are eligible for the scheme. Significant consideration will have been given to the most complex aspect – how much can actually be claimed through the scheme.
There are a number of different calculations to apply, depending on each individual employee’s circumstances. There have been reports that this has been extremely challenging for payroll professionals to grapple with, whilst also continuing to deliver payrolls, ensuring that employees get paid both on time and accurately.All of these considerations are crucial aspects of submitting a claim under the CJRS.
Good compliance is an extremely important consideration at a time when HM Revenue & Customs (HMRC) is publicly and actively focussing its attention on ensuring that incorrect claims are revealed and that action is taken to ensure the claimant carries out checks and, where necessary, corrects their claim.
We have heard from members that HMRC’s requests for information can create considerable work, due to providing significant amounts of data in relation to claims, many dating back to April.
HMRC has made clear via guidance (http://ow.ly/Ut6Q30rnuu4), that there are certain record-keeping requirements. Claimants are required to discuss any changes to staff employment contracts with the relevant individuals and retain a written record of the agreement for a minimum of five years. This must be made available if HMRC requests sight.
Employers making claims under the CJRS are also expected to keep a copy of various other records for a minimum period of six years, including:
the amount claimed and the associated claim period for each furloughed employee
the claim reference number generated on submitting a claim
calculations in relation to the amounts claimed
for employees who were flexibly furloughed, a note of the usual hours worked and the associated calculations, and a record of the actual hours they worked.
Errors and fraud
HMRC has estimated that between 5% and 10% of grants issued through the CJRS either contain mistakes or are fraudulent. The associated cost of this to HM Treasury is expected to be somewhere between £1.75 billion and £3.5 billion.
HMRC is currently investigating approximately 27,000 suspected fraudulent CJRS claims, involving 11,000 cases. It has distributed letters to these employers stating that there is potentially a discrepancy between what they have claimed and what they were entitled to claim.
HMRC has also received a substantial number of whistleblowing reports from workers who having been placed on furlough are then expected to work – a practice known as ‘furlough fraud’. A fundamental aspect of the CJRS is that employees must not carry out any work for the employer that placed them on furlough for any time they are recorded as on furlough. They can, however, participate in training or volunteer for an unlinked organisation; and they can work for an unlinked organisation if their contract of employment allows for this.
There have also been reports of companies claiming grants for employees not actually working for them, or where incorrect salary details have been entered to inflate the amount of claim that an employer can make in relation to their employees’ wages.
Looking ahead, employers that make claims from December will be named publicly from February, and employees who are the subject of claims will be notified. This step supports greater transparency for all and aims to reduce fraudulent claims.
HMRC accepts that mistakes can happen, particularly when considering how quickly the CJRS was implemented and how frequently guidance on the topic changed. However, it still encourages claimants to check the claims that they have submitted to ensure that there are no errors.
Where an employer has underclaimed through the CJRS for periods after 1 November 2020, they have 28 calendar days following the month to which the claim relates to increase the amount of that claim.
Employers that have overclaimed through the CJRS and not made repayment, must notify HMRC by the latest of ninety days of the date they received the grant that either they were not entitled to it or no longer entitled to keep it because their circumstances had changed. Incorrect claims can be adjusted in a subsequent claim, but if no further claims are to be made repayment can be made directly to HMRC. Anyone wishing to proceed in this fashion must use the online service, to generate a payment reference number, which must be used when repaying HMRC.
The resounding messages to employers, and anyone who has claimed under the CJRS, is to observe the relevant record-keeping requirements and to double-check the claims they have already submitted to ensure they are correct.
Featured in the February 2021 issue of Professional in Payroll, Pensions and Reward. Correct at time of publication.