The importance of getting furlough claims correct – or pay the consequences

The Coronavirus Job Retention Scheme (CJRS) has been vitally important for virtually all businesses within the Healthcare Sector. The scheme became more flexible from July and after the most recent announcement to extend this scheme, it will continue to 31 March 2021.

The ever-changing eligibility will put added pressure on Healthcare payroll staff to ensure the correct amount is claimed from HM Revenue and Customs (HMRC) as the ultimate responsibility of the claims lay with the business owners themselves.

It is estimated that there could be as much as £4bn of claims made that are either fraudulent or paid out in error. Healthcare businesses are especially susceptible to payment errors due to a variety of reasons. Many healthcare professions, including dentists, will be largely funded through other government bodies, such as the NHS. Therefore, it is important to understand the mechanics behind each COVID support scheme, to ensure the claims are not overstated.

In addition, a high percentage of healthcare professionals work long hours and may have increased exposure to COVID forcing staff to go off sick or self-isolate due to the nature of their working environment. All these added factors can cause discrepancies in claims.

The Government’s approach has been “pay now and check later” and given the size of the errors, HMRC will be auditing employers’ use of the scheme. Not only will they recover any overpayment, they may also charge penalties of up to the same amount again. There is also the potential for HMRC to “name and shame” those found to have overclaimed, leading to negative PR and reputational damage.

Common errors have included:

• Calculating the furlough payment incorrectly for an employee who was furloughed part way through a pay period.
• Errors in calculation when salary sacrifice schemes are used.
• Calculating the furlough claim by reference to the wrong salaries, particularly those employees on variable pay.
• Paying trainees below the national minimum wage when they spend time training e.g. on online training courses during the furlough period.
• Not topping up the employee for normal holidays during the furlough period.

Dentists, in particular, need to pay extra attention as they can only make furlough claims on the private element of their income. Therefore, they must calculate the percentage of income split between private and NHS to see what can be claimed through CJRS.

At EQ, we can support clients by either preparing the claims in the first instance or by auditing claims previously made to ensure they are correct. Any overpayment (or underpayment) errors can be corrected before HMRC investigate, with businesses having 90 days to correct any errors.

If you have any queries regarding the above, or would like to discuss your circumstances, please contact our EQ Healthcare team via healthcare@eqaccountants.co.uk or call one of our offices.