How to prepare your business for a CJRS compliance enquiry

HM Revenue and Customs have established a dedicated task force to validate the accuracy of furlough claims.

With some £70bn invested into the Coronavirus Job Retention Scheme (CJRS) since it was first introduced in April 2020, HMRC is actively contacting employers as part of its compliance activities.

If a business is found to have claimed in error, financial penalties can be enforced. Furthermore, criminal prosecution can follow if furlough fraud is suspected.

Fortunately, businesses can take steps now to help ensure that they are ready for a CJRS enquiry and act to mitigate potential penalties. You do not need to wait to receive a compliance check letter from HMRC to get your furlough affairs in order.

Having helped hundreds of businesses negotiate the complexities of furlough schemes, Pierce Business Advisory and Accountancy Group are ideally situated to talk you through the what, why, and how of CJRS compliance and how you can prepare today. Let’s get to it.

What exactly is a CJRS compliance check?

In short, HMRC is writing to businesses and asking them to pay back CJRS payments where too much has been paid or if furlough fraud is suspected. The HMRC may also contact employers by phone or in writing to check:

Company Tax Company VAT returns Accounts submitted and tax calculations Self-assessment tax return Any taxes you pay If you have employees, PAYE records and returns

Such compliance checks can take place randomly; there does not need to be a suspicion of inappropriate activity for the HMRC to reach out.

What are the penalties for furlough fraud?

Civil and criminal penalties can be enforced by the Fraud Investigation Service. The HMRC taskforce is expected to recover up to 1.5 billion in furlough overpayments and fraud by the end of 22-23. However, the true rate of error and fraud for Covid-19 support schemes in 2020-21 isestimated to run at 8.7% of the £60 billion paid out.

Why you need a furlough review

A furlough review or CJRS compliance review will help you prepare for an enquiry from HMRC. Furlough rules were complex and changed continuously; by undertaking a review you get an expert second opinion on decisions relating to furlough claims. This can give you peace of mind that your claims were completed in line with Government guidance.

Furthermore, a furlough review puts you one step ahead and will uncover any potential overclaims before HMRC can open an enquiry. This is incredibly important as an unprompted disclosure to HMRC can reduce any related penalties to zero.

By contrast, prompted discloses could lead to penalties that include 100% of overpaid CJRS payments. An external furlough review can help to show H M Revenue and Customs that “reasonable care” has been taken; this in turn, can help to reduce any penalties that may arise from a compliance visit.

How Pierce can help review your CJRS payments

Pierce Accountants provide a full CJRS review service which includes:

Sample or full recalculations of all furlough claims Checks for common calculation errors or possible misinterpretations of the furlough rules A breakdown of any under or over claims Recommendations on how to correct any errors found

All information is provided in a detailed report with calculations appended.

The Pierce furlough experts have already helped businesses just like you to get their CJRS payments in order. We have supported hundreds of businesses with matters related to furlough such as the UK-wide organisation, Roadchef.

Roadchef first contacted Pierce for help to complete furlough calculations at a time when claims were outstanding for a number of months and within 8 weeks, Pierce brought thousands of claims for their employees up to date. Head of Finance for Roadchef, Matt Edgar commented:

Roadchef is one of the UK’s largest motorway service operators and like many companies, has been hugely impacted by the Covid-19 pandemic. Over 2,500 of their staff have been furloughed under the Coronavirus Job Retention Scheme in 2020, creating a whole industry of work to ensure employees are paid correctly and that claims to HMRC aresubmitted timely and accurately.

Pierce … provided a single point of contact and was thorough in inputting to know our business and the processes that we had put in place. Within 8 weeks of starting work, they had provided us with the data to get up to date with our claims.

Start your furlough review today

Preparing for a coronavirus job retention scheme compliance enquiry needs to be at the top of your business's to-do list. Get the help you need to make the process as easy as possible by reaching out to Pierce today.

Complete a quick enquiry form for a free, initial furlough consultation. Alternatively, you can call 01254 688100 and ask for Philip Johnson, Payroll Manager.