Implications of the CJRS closing

6 August 2021
Image with a bright yellow background with the text 'Furlough scheme update'

The number of people on the furlough scheme is in sharp decline as the scheme begins to wind down and the lockdown restrictions ease. This has allowed more people to return to work, particularly in the hospitality and leisure industries. This has resulted in the lowest number of people on the scheme since it began back in April 2020, reported the BBC.

In the last three months, younger people especially have come off furlough twice as fast as all other age brackets. During this time, almost 600,000 under-25s have left the scheme according to the Treasury.

In May 2020, at the peak of the pandemic, nearly nine million people were on furlough. Now, there are less than two million people on the scheme.

Under the CJRS, the government pays for 80% of their current salary, capped at £2,500. From the beginning of July, the government asked employers to contribute 10% towards their employees’ wages. This increased to 20% from August. So, the government only pay 60% of employees’ usual wages up to a cap of £1,875. Although the scheme has been extended several times, it will end on 30 September.

As a reminder, you must not claim under the CJRS for hours your employees work. HMRC are carrying out compliance checks to identify error and fraud in claims.

Implications of the CJRS closing

As the CJRS closes at the end of September there are a number of implications we outline below that business owners will have to consider.

Potential redundancies

Image of a worker who has been made redundant pacin gup his desk into a cardboard box

 

One of the implications of the CJRS closing is that businesses are faced with tough decisions around the return of staff and redundancies. This is because businesses may not be back up to expected trade levels or may have made organisational changes during the pandemic. This means businesses may have to calculate final pays and ensure employees and any decisions around redundancies are dealt with fairly and correctly. Unfortunately, this can lead to disputes between employees and employers. These can be time-consuming and costly if not done correctly.

HMRC investigations

Picture of the HM Revenue & Customs website magnified under a magnifyingglass

Another result of the furlough scheme closing will be with HMRC and their investigations into the correct use of the scheme. We have already seen HMRC issue ‘compliance checks’ to businesses. These are only likely to increase as HMRC looks to recover any incorrectly claimed furlough or catch any potentially fraudulent activity. HMRC do not need any reason to launch an investigation. It is likely they will aim to cover most furlough claims in the coming years. Responding to these investigations can prove time-consuming and costly. It is therefore important that accurate information is provided to HMRC.

Here at Maple, we offer Tax Investigation Insurance to all our clients through our trusted partner Croner Taxwise. This service will cover the fees for dealing with a tax investigation for HMRC, even if you have done nothing wrong. We manage the investigation on your behalf, ensuring the matter is dealt with quickly and correctly. This service also grants you access to specialist advisors, particularly for HR and Employment Law. We have found these invaluable in guiding employers through tricky situations with employees. If you are interested in taking this out, please contact your client manager. Alternatively, contact us on 01332 207336 for more information about how we can help.

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DE1 1FL

01332 207336
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