The extension to the Furlough scheme (under the Coronavirus Job Retention Scheme / CJRS) has been received with mixed feelings of relief as well as frustration. The government’s stance has been hailed to be as ambiguous as ever for hadn’t the chancellor in September spoken against furlough as being ideal thanks to its instance of holding employees on no longer viable jobs? However, it also serves to underline the government’s priority on keeping public health on first base. The financial repercussions are certainly there and the economy has faced losses but the government insists that the winter is to be harsh and so to lower the blow furlough has been reintroduced again not for just a month but will instead continue till March 2021. The virus has been unpredictable which is why the government has been forced to backpedal and change its stance time and again. This is most apparent in the first to be extinct Wage Subsidy Scheme and now redundant Job Support Scheme.

What will furlough cost the government?

The very conception of furlough was more at the spur of the moment along with the reclaim of SSP towards Covid 19. As per the estimates of the Treasury, saving lives and jobs will not prove cheap to the government as per 1 million of people on the scheme the cost is set to be about 1 billion. Figures till March however, have not been published as of now. The extension to furlough has become a trend with this being its 3rd extension if you count the fact that the furlough scheme was to end on 2nd December 2020. As per the estimates from the Bank of England, about 5.5 million employees are expected to be on this scheme only during the November phase of the extension. Furlough at 80% reclaim in no way is cheap which is why the ministry had previously objected to it but considering the new lockdown and the predictions of a second wave of infections one does wonder how much choice has the virus really provided to the government? Putting public health first and ensuring jobs are retained while thinking on one’s feet is not easy. Unfortunately, some claim that self-employed persons haven’t been given as much attention though the government has tipped the scales as far has extension as help goes; in that direction as well.   

However, frequent changes can prove detrimental if we count the increase that was noted in redundancies as the furlough scheme drew to its close in October. Perhaps in reaction to this the government realised that the moment was right not right to do away with furlough that to in the light of the next lockdown.

Who is eligible?

Employers

• - Whether or not the furlough scheme has been used previously is not an issue
• - Whether the business is closed or open does not matter as long as the furloughed hours imply the hours the employee has not worked (of the usual hours worked) due to the pandemic situation
• - Across the UK employers are open to make claims except for those organisations that are publicly funded

Employees

• - The employee needs to be on payroll (with an RTI submission made) by latest 30th October 2020 – thus, the RTI or real time submission needs to be between periods 20th of March 2020 and 30th of October 2020 indicating earnings of the employee
• - Any type of employment contract will do
• - Flexi-furlough is open
• - It is not necessary for the employee to have been previously on furlough

NOTE: The revised furlough scheme indicates that even those who have been made redundant post the 23rd of September can be put on furlough if they resume working.

What can employers claim?

• - From 1st of November to the 31st of January 2021 – 80% of the usual wages can be claimed for the usual hours not worked up to the cap amount of £2500 on a monthly basis per employee
• - This is similar to how the furlough scheme began initially but as you can see, there is no tapering off in the furlough amounts stated as of now, perhaps January the percentage claimable might fall
• - Employers however, would have to pay employees for the hours worked
• - Also, for the hours worked as well as the hours on furlough the employer needs to contribute towards the national insurance and workplace pensions – this is worked out to be 5% of the employment costs
• - Top up of wages has been left to the discretion of the employer and is thus, not mandatory – this amount is not claimable

How to claim?

• - The claim process still remains online thus, agents can also submit the same
• - For the claim periods commencing 1st of November till March end the claims can now be made
• - However, if you have had furlough claims pending till 31st October to submit may not be possible as the deadline was 30th November 2020

CJRS Compliance Checks – Why it is safer to have your accountant process furlough claims

One cannot deny that furlough has addressed the need for the hour for countless employees as well as employer. However, due to its complexity and the unfortunately changing instructions, furlough has become a challenge for employers to process. It has been estimated that 9.6 million UK residents have benefited from the furlough scheme so far. HMRC has found that from the conception of furlough to the middle of August 2020, £3.5 billion or at least 10% of these monies have been wrongly or misleadingly claimed. Due to this the HMRC has now actively launched CJRS compliance checks.

So, what do you do if you receive such a notice from the HMRC requesting for detailed calculations, information and figures? This is where having an expert to do this task can be a great assistance and also grant you some respite from stress. Doshi Accountants does not only deal with accountancy and tax services. Being a one stop accountancy services firm that can deal with queries from your self-assessment to MTD and even furlough, Doshi Accountants can ensure that your business remains compliant to the changing furlough norms. If you find yourself under an investigation, we can assist in sorting out the facts as the HMRC would not impose any penalties if they find the error to have been due to ignorance. Thus, with an expert by your side navigating through the changing legislation will become indeed easier.