Furlough + Payroll = Trouble

14th October 2020

If you have a staff member running payroll in-house, have you talked to them recently?

Chances are that you’ll catch an earful about how stressed out, tired and fed up they are…

Payroll, which used to be a relatively simple monthly task, has become the bane of their lives. And it’s never-ending, taking up a lot more time than it used to!

The reason’s simple…

The furlough scheme is a nightmare for payroll.

Especially since July, when it became possible to furlough employees for a certain number of hours only, businesses have had to calculate carefully each claim they make.

The rules change frequently – in fact, they’re changing again on November 1 – so there’s a lot of detail to master.

And because each team member might be working different hours, your accountant has to be in close contact with HR to make sure they understand the employment status of each team member.

It is really complex. So if your in-house accountant seems to be permanently agitated, it’s for good reason.

The risk for you is that they inadvertently get a claim – or whole series of claims – wrong.

It’s so easy to do…

…And if they’re working alone, or in a very small team, there’s probably no one double-checking their work.

And while this might sound like an annoyance, it’s actually a very serious problem.

You see, HMRC has been clear since the beginning of the furlough scheme that it is vulnerable both to fraud and to mistakes – and that they will come down like a ton of bricks on anyone who breaches the rules, even inadvertently.

They are requiring businesses to keep all records for six years, which gives them plenty of time to double-check the claims that you make.

So if your stressed accountant, who is pushed for time, makes an innocent error in furlough claims today…

…There’s every chance that your PAYE inspector will pick up on it in 2021, 2022, even 2025…

…Costing you dear.

You do not want to be tied up in months of rows over whether Lucy from your marketing department was really working 30% of the time, or whether you were right to claim that Johnny in admin had reduced his hours to 50%.

HMRC already has the power to claw back any payments made to businesses that were not entitled to receive them, and in serious cases, issue fines and penalties.

The bottom line is that companies with more than a handful of employees are finding that payroll is no longer a job for a small, in-house accounting team (and definitely not for one accountant working by themselves).

And if you, too, are relying on such an arrangement, it may be time to think again…

…Not just about who’s running your payroll but about whether it’s a sign that you’ve outgrown your accounting provision in general.

You see, if your in-house accounting team is struggling with this, what else might they be struggling with?

What other critical calculations or transactions are going wrong because they’re working alone – with no checks and balances?

What other regulations are they finding it difficult to keep up with?

And most of all… When they are tied up all day with these complex tasks, what are they not finding time to do?

For example, when was the last time they sat down with you to review your cash flow projections and monthly accounts - to help you use the financial information they’re generating to make better business decisions? (And would they even have the experience and background to give you such advice?)

If you suspect that any of this is going on, it’s a good sign that it might be time to upgrade the way your finances are managed.

So if you worry that’s the case, why not get in touch with me today, to find out how our outsourced finance department can help you?

Because we’re a team, we can run your accounts at the kind of level that a corporate would take for granted – even if you’re much smaller.

Take your payroll as an example. Not only are we up-to-date with every change in the furlough scheme (because staying on top of these things is part of our remit), but our team follows a strict process when running your payroll, minimising the chances of mistakes.

And all work is checked by at least two people – sometimes as many as four – so you can rest easy, knowing that this complex operation is being handled to the highest of standards…

…and if and when HMRC comes knocking, your records will be in perfect order – showing that every claim was processed correctly.

We take the same approach with every transaction, every invoice, every spreadsheet, so you can trust your numbers at all times.

And because we have lots of skills on our team, we can also take on functions that your in-house accountants simply can’t – like working with you personally to make sure you understand your numbers, and using them to grow the business.

If that’s the kind of accounting function you’d like, just email me right back or call us on 01279 647 447. We’d love to help.



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