The Coronavirus Job Retention Scheme (CJRS) has supported more than 9 million people during the pandemic – amongst them many contractors and freelancers who were entitled to support as directors of their companies.

However, after 31 October 2020 support for these individuals will be completely withdrawn, leaving many unsure of what the future may hold for them.

To help answer some of the questions they may have our experienced team at Cogent have put together some common questions and provided answers to them.

What are the arrangements for the final month of furlough in October? 

From 1 October 2020, grants from the CJRS taper down to 60 per cent of a furloughed employee’s usual wages, capped at £1,875 a month, with employers required to contribute another 20 per cent, so that furloughed employees continue to receive 80 per cent of their usual wages. Under the current plans, the scheme then ends on 31 October.

When does the final claim for the CJRS have to be submitted by? 

Although the scheme ends in October, employers have until 30 November 2020 to submit claims for the CJRS. It is imperative that you carefully check all claims before submitting them.

I am unable to bring back an employee from furlough and I aim to make them redundant is there anything I should be aware of? 

Any furloughed worker that loses their job is eligible for redundancy pay based on their normal wage rather than the reduced rate paid under the Coronavirus Job Retention Scheme (CJRS), under new legislation.

Employees with two or more years of continuous service that are made redundant are typically entitled to a statutory redundancy payment that is based on length of service, age and pay – up to a statutory maximum of £16,140.

The new rules on redundancy also apply to statutory notice pay, which covers the period before a worker’s employment ends. This paid notice period typically varies from one to 12 weeks’ depending on an employee’s length of service.

Under the new legislation, notice pay must be based on an employee’s normal wages rather than the lower wages they may have been paid under the CJRS.

The legislation also ensures that basic awards for unfair dismissal cases are based on full pay rather than the reduced wages under the furlough scheme as well.

I think I may have made an error in one of my claims, what should I do? 

No penalty will be applied for errors in a CJRS claim if the excess grant is corrected within the later of:

• 90 days from the receipt of the grant, and
• 20 October 2020.

There are also no penalties for submitting an inaccurate CJRS claim which resulted in a grant that was lower than the employer was entitled to.

I have received a letter from HMRC about furlough fraud and I am concerned about potential penalties, what can I do? 

HMRC has been writing to employers, asking them to review their CJRS claims, often without specifying what is wrong with the claim, or even which month’s claim HMRC has an issue with. The tax authority estimates that as many as 10 per cent of claims either contain errors or are fraudulent.

It is important that you review your claims as suggested as the penalties for errors can be significant and included the reclaiming of 100 per cent of the grant paid plus additional penalties if HMRC believes a person attempted to conceal an error or acted fraudulently.

Is the Government likely to offer support if my business is required to shut again due to a local lockdown? 

Many business owners will be concerned about the introduction of local lockdowns and what it may mean for them.

In many cases, contractors will be able to work remotely or go into another business’s place of work.

However, if they own premises that are closed due to local restrictions, they may be entitled to grant funding. Under the new scheme:

• If a business occupies premises with a rateable value less than £51,000 or occupies property or part of a property subject to an annual rent or mortgage payment of less than £51,000, it will receive £1,000.
• If a business occupies premises with a rateable value of exactly £51,000 or above or occupies property or part of a property subject to an annual rent or mortgage payment of exactly £51,000 or above, it will receive £1,500.

The new grants will be delivered by local authorities, who will be responsible for distributing the grants to businesses in circumstances where they are closed due to local interventions. Local authorities are being given the discretion to determine additional eligibility criteria should it be deemed necessary.

These new grants can be used alongside other support, but as with other COVID grants, funding from this new initiative will be treated as taxable income.

Here to help

Throughout lockdown we have assisted our clients with the requirements of the CJRS, ensuring they have been able to achieve maximum benefit from the grant that is available as part of our wider package of support during the pandemic.

The end of furlough is likely to have a significant impact on the lives of contractors, freelancers and small businesses – in many cases forming the only financial support available to them.

As the CJRS ends, we want to reassure our clients and businesses that we are standing by them to ensure they have the support they need. To find out how you can make the simple switch to our services, please call 020 8952 2234 or email info@cogentaccountants.co.uk