Contractor's Tools

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Is Your Limited Company CJRS Compliant?

Limited Company

A study by economists at the universities of Oxford, Cambridge and Zurich suggests that 63% of furloughed people have spent some time working for the employer that furloughed them. Even where they were not formally asked to work, this leaves those employers ineligible to claim the Coronavirus Job Retention Scheme (CJRS). The implication is that thousands of employers have claimed CJRS grants to which they were not entitled, and HMRC will be actively pursuing such cases in the near future.

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HMRC will aim to claw back any grants that have been paid to such employers, and they have the power to impose fines and penalties in serious cases. These can be avoided by reporting errors to HMRC before 20th October 2020.  Contractors who have claimed a CJRS grant through their limited company should check carefully to make sure they were entitled to the money they claimed, and take urgent action to resolve the situation if they are in any doubt.

 

Did you carry out any work for your limited company while you were furloughed?

Where contractors have broken the CJRS rules and made themselves ineligible for the grant, this is most likely cause. You are allowed to execute your duties as a director of your company, but you must not carry out any fee-paying work for your company while you are furloughed. If you have furloughed employees, the same restrictions apply to them.

From the 1st of July

From the 1st of July, any furloughed employees can be put on flexible furlough, which means they can return to work part time, and the furlough period no longer needs to be a full three weeks.  You will need to record the number of hours your employees work, and the number they are furloughed, with reference to their “normal working hours”. 

Have you documented your furlough arrangements?

If you’ve furloughed yourself or any employees through your limited company you must keep appropriate records. As a minimum requirement:

  • The original furlough agreement covering the period up to 30th June
  • If the agreement changed to allow for flexible furlough after 30th June, you will also need to keep amended furlough agreement
  • A record of the amounts claimed and the claim periods for each recipient
  • The associated claim numbers
  • The calculations used to generate the claim amounts
  • Detail on the usual hours and actual hours worked for employees going onto flexible furlough

You should also keep any information that might help to demonstrate your adherence to the rules. HMRC may investigate several years in the future, so it makes sense to document as much detail as you can so you have the information available to defend your position.

If you believe you may have made an incorrect claim

If you think you might have made an incorrect claim, either because you were not eligible or because you calculated the claim incorrectly, you need to take action as soon as possible, rather than wait until HMRC find the error and add penalties onto the debt. Again, our advice would be to contact your accountant in the first instance, and report the error to HMRC if indeed you have made one.

If you have any questions or if we can help in any way, please call our expert team on 01296 468 483 or email info@orangegenie.com.

 

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