Furlough: Did you get it right?

1 April 2022


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?



Furlough agreements compliance review.


   

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

 
   

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

 
   

Assistance with claims, reviews and correction reporting to HMRC. 

 
   

Reviewing that furlough procedures supported the claim requirements. 

 
    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.  
    Redundancy costs structuring using CJRS support was correctly applied.  


For more information, please contact

Carolyn Brown Carolyn Brown

Head of Client Legal Services and Employment Legal Partner

Susan Ball Susan Ball

Partner

Charlie Barnes Charlie Barnes

Legal Services Director