Aspire's Health Check: COVID-19 (Part 1)
17 April 2020
17 April 2020
For whom the Bell Tolls...
For many UK businesses, the consequences of key decisions made during the COVID-19 pandemic may prove more damaging than the effects which are currently being felt.
The Chancellor of the Exchequer announced unprecedented measures to help business ride out the storm but, is the storm brewing for those businesses who have failed to properly consider all their financial options, demonstrating a scant regard for the “spirit” of the new measures.
The Coronavirus Job Retention Scheme (CJRS) has proved popular with many businesses as a way of reducing payroll costs caused by a restriction in trading conditions. However, there is no doubt that HM Revenue and Customs (HMRC) will, at some stage, seek to challenge the eligibility of employees for whom the grant has been claimed and seek to recover any overpayments together with penalties and interest from the employer.
As part of its post-COVID PAYE audit regime, HMRC is likely to request detailed information regarding the furlough process i.e. selection criteria, decision making and financial aspects (similar to redundancy selection criteria) which should all have been considered at the time the decision was made to claim the grant.
HMRC has already started the ball rolling with the introduction of limited checks to minimise fraud i.e:
Faced with a redundancy selection head-ache after 31st May 2020, employers may now be faced with the additional threat of being reported to HMRC by aggrieved employees.
As part of its audit regime, HMRC will be looking to ensure that employees have not continued to work for a “linked employer” whilst being furloughed and the correct reference pay has been used to calculate the grant.
Top 10 Areas for HMRC Investigation
HMRC – Risk based approach
There is little doubt that HMRC will seek to conduct risk-based audits to recover overpaid CJRS payments and that this role will be handed to the Fraud Investigation Service which will not hesitate to utilise its formal information powers in appropriate circumstances.
Whilst HMRC has suspended a lot of its routine tax enquiries, the approach taken by HMRC post COVID will be robust and underpinned by the need to recover some of the billions of pounds claimed by those businesses which, according to HMRC, have not acted in the “spirit” of the CJRS guidance.
Furlough Heath-Check
We are currently offering a fixed price “Furlough Health-Check” aimed at guiding you through the process and replicating HMRC’s likely approach to a post-COVID investigation – without any of the nasty consequences.
If you would like to arrange a Health-Check please do not hesitate to give us a call on 0121 445 6178 or email enquire@aspirepartnership.co.uk.