Cirencester and Malmesbury accountants say employers should consider outsourcing payroll to minimise furlough scheme risks

A Cirencester and Malmesbury-based accountancy firm has urged employers to consider outsourcing payroll to minimise the risks of making an incorrect application to HM Revenue & Customs (HMRC) for a furlough payment.

Sharla Dandy, a Partner at McGills Chartered Accountants, spoke out following the launch of an online portal for applications to the Government’s Coronavirus Job Retention Scheme (CJRS).

The CJRS is intended to allow employers affected by the measures to limit the spread of Coronavirus to ‘furlough’ employees so that they cannot carry out any work, but then to pay them 80 per cent of their usual wages, up to a monthly cap of £2,500, with the support of a Government grant. It also allows employers to claim for the cost of employer National Insurance Contributions (NICS) and automatic enrolment pension contributions.

Sharla said: “The CJRS promises to enable businesses affected by the crisis to place employees on furlough at no cost to the employer, while they continue to be paid up to 80 per cent of their usual wages and remain on the payroll so that they can resume work after the crisis.

“However, the application process is potentially complicated, especially when it comes to calculating the correct amount to be claimed in respect of each employee.”

She said that calculations could become particularly complicated in circumstances where a furloughed employee works irregular hours or where they have only been furloughed for part of the month.

“Employers will have to work out the exact amount to claim for, including their employers’ NICS and minimum automatic enrolment pension contributions, but only on the 80 per cent grant and only for the time during the pay period that the employee was furloughed.

“This becomes even more complicated when employers have to take into account employees returning from maternity and paternity, or the changes in the National Minimum and National Living Wages in April,” added Sharla.

“For that reason, even employers that do not usually outsource their payroll should consider seeking professional support with applications to the CJRS. HMRC has already said that it will retrospectively audit claims and we can expect that any incorrect claims will attract severe penalties.”

However, Sharla urged employers to use caution when selecting a firm to provide support with the scheme.

“Employers will need to provide bank details in order to receive payments under the scheme and there is a risk that emails could be intercepted and changed by fraudsters.

“As such, they need to ensure they use a firm which has robust fraud prevention measures in place.”

McGills Chartered Accountants has a range of measures in place to combat the threat of fraud.