Take time to ensure your furlough records are in order

As expected, HMRC are starting their crackdown in earnest on fraudulent claims under the furlough scheme.

Some of the calculation rules were so complicated that I anticipate many employers will have made innocent errors so it will be reassuring for many that, whilst any excess claimed will need to be repaid, the focus for penalties and prosecutions will be on the fraudulent claims. 

However, it is advisable to make steps now to ensure company records are correct. 

For example, look at why decisions were made on which employees were entitled to benefit under the CJRS and if circumstances changed, such as they needed to perform some work, what steps were taken? 

How was each furlough claim calculated before it was submitted to HMRC and was the calculation method correct now that more detailed guidance is out?

Is there an individual written record of the furlough arrangements with each furloughed employee as this is a requirement of the scheme and the document must be kept for 5 years.

If there isn’t a written record for any reason, then prepare one and even if the employee has already returned from furlough then a furlough return letter could still be prepared to seek to comply with this requirement. 

If any employees have claimed they were asked to work while on full furlough, ensure these have these been adequately investigated and the issues corrected.

Now is a good time for employers to review whistleblowing and grievance procedures to be ready to deal with any employees who try to claim the business abused the CJRS. The HMRC fraud reporting form is being well publicised and employees may contact it direct but for employees who do report internally first, they will soon go to the HMRC if they don’t feel their concerns are being investigated properly by the employer.

And finally, all employers should be aware of the HMRC 90 day amnesty period, to correct furlough claims which will end on 20 October 2020.