Date
20 Sep 2021Category
Tax, Employer SolutionsThe UK government’s Job Retention Scheme (JRS) was first announced on 20 March 2020 to support employers whose business operations were adversely affected by the COVID pandemic to maintain their workforce.
The scheme was initially intended to be a short-term measure, to cover the three months from 1 March 2020 to 31 May 2020. However, it has since been extended numerous times, with the scope of the scheme altered, to coincide with the movements of the pandemic.
As the population and businesses adapt to living with the virus, the JRS is due to finally end on 30 September 2021, with the deadline for September claims being 14 October 2021.
JRS calculation review / HMRC enquiries
As of August 2021, £68 billion had been claimed through the scheme by 1.3 million employers.
Despite the Government and HMRC doing all they could to ensure the scheme was robust, HMRC announced they would be tackling any abuse by setting up a dedicated task force to launch investigations into claims made. We originally believed that this team would be in place for two years, but now understand it will be for the foreseeable future. There is no doubt that HMRC will be taking any misuse of the scheme seriously.
The JRS was implemented very rapidly, with guidance being updated frequently. It may not have been easy for all employers to keep abreast of the changes and we believe a number of employers could have misunderstood the rules and unintentionally submitted incorrect claims.
From the outset HMRC signalled its intention to review JRS claims and businesses should now consider reviewing claims to ensure they are accurate. If you would benefit from reassurance or assistance with your review we can help, by checking your furlough processes and calculations to identify any potential errors that may have been made and provide recommendations to remedy.
We can also assist you with HMRC where they may have opened an enquiry into your JRS claims as we appreciate HMRC investigations can be daunting. We can support you throughout the enquiry or deal directly with HMRC on your behalf.
Termination payments
With the tapering down of Government support from the JRS since July 2021, this has encouraged a number of employers to take more employees off furlough and back into work.
There have, however, been recent reports that job vacancies are at an all time high, exceeding one million, since records began in 2001 with the food and drink, hospitality, haulage and rural sectors some of the hardest hit due to skill shortages and the lack of overseas workers.
Where business operations are not back to pre-pandemic levels, employers may need to consider restructuring for the new landscape. This may include cutting staffing levels where there is insufficient work to absorb currently furloughed employees.
Termination payments can be rather tricky to navigate and quite commonly treated incorrectly by employers for tax and NIC. It is not as straight forward as taxing payments that exceed £30,000.
The reason for a termination is important as this helps to determine the tax and NIC treatment. Also, the various elements of the termination package need to be identified as the tax and NIC treatment may well differ for each element. The contractual position will also need to be considered; this includes the employment contract and any termination agreements. In addition, changes to the termination payment rules from April 2018 further complicated matters, where a Post Employment Notice Pay (PENP) calculation is to be carried out where an employee does not work their full notice period.
If you are having to terminate any employee contracts, it is recommended you seek advice as there could be significant tax and NIC implications for the employer if treated incorrectly.
We are here to help
If you have any queries on any of the areas included in this article, please get in touch with your usual Azets contact or a member of our specialist Employment Tax team.
