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Director furlough claim and year end accounts

Dealing with grant income re covid-19 claims

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Client - small retail company, 10 staff + 1 director.

We are just finalising the accounts for the company when it has come to light that the sole director has left themselves on furlough (for quite a period of time) whilst the company has been actively trading (a payroll company does payroll/furlough claims). When challenged the director has claimed they have done no work and started quoting Hmrc's basic stat duties only.  We just don't accept that the director has done no work - we just don't see how it's possible. 

Asides from the issues of SAR and dis-engaging how do we deal with the acccounts that have to be finalised now? As far as we are concerned the grant income from CJRS is in excess of what should have been claimed. If the client refuses to accept there should be a reduction and repayment do we just state we can't sign these off and dis-engage immediately?    Has anyone experienced similar?

 

Replies (15)

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By Paul Crowley
06th Oct 2021 14:19

There will be just so many of these.
Clients not quite understanding the rules

BUT this one is different
Your client stole money from the taxpayer
Even worse they did payroll for others. Not unreasonable to assume everyone of their clients had similar dubious claims submitted

But any SAR would be ignored.
I would charge up and resign
The basic start point for a claim was that COVID stopped the director working, not just that he chose not to work
Payroll work qualified as essential work and more, not less, work would have been needed to be done

Your client is a bounder and a cad

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Replying to Paul Crowley:
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By Bobbo
06th Oct 2021 14:33

I don't read it that OP's client is a payroll provider. I read it that the payroll and furlough submissions are completed by a payroll provider (i.e. not computed by the client in house, or by OP's firm).

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Replying to Bobbo:
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By Paul Crowley
06th Oct 2021 14:51

yes
On a reread they are just a client

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Replying to Paul Crowley:
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By suepg
06th Oct 2021 14:40

I don't think the client worked in payroll. I think the OP just indicates that it was computed and claimed elsewhere, which is why the OP knew nothing of the furlough situation.

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By Hugo Fair
06th Oct 2021 15:18

"When challenged the director has claimed they have done no work and started quoting Hmrc's basic stat duties only."
Have you explained that statutory duty only covers 'any duty imposed by or under any Act of Parliament or any written law' (like filing of statutory returns)?
Thus specifically NOT the general day-to-day administration of the company or the issuing of instructions to staff, etc.

And when you say "We just don't accept that the director has done no work - we just don't see how it's possible", what was her/his response - and what information do you have to back up your concerns? Has the retail operation been closed or was it trading? Are there members of staff with authority to have been making decisions in the absence of the Director? Would those decisions explain all transactions?
In essence, what evidence do you have of malfeasance?

If you can't have those conversations, or don't trust the replies, then the relationship is non functioning and you have no option but to disengage.

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Replying to Hugo Fair:
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By Learningvfast
06th Oct 2021 15:59

We had already clarified statutory duties last year and when we found out we discussed this again. They were adamant they had done no work but this is a small director/owner company and the company has traded throughout (apart from initial lockdown). The director has sole access to the bank account, paying suppliers, wages etc. and using the debit card for business purchases. This responsibility is not delegated elsewhere.

The payroll company have told us that the director has been responsible for working out the info for the covid claims.

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By GHarr497688
06th Oct 2021 15:22

I can't believe you are doing this.
"We just don't accept that the director has done no work - we just don't see how it's possible".
I hope your facts are correct and you have evidence as you sound like judge and jury without a scrap of hard evidence - might be you getting sued for false allegations.

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Replying to GHarr497688:
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By paul.benny
06th Oct 2021 15:57

The OP clearly said the business was trading - which does rather make it seem implausible that the director was doing no work. They're called *Suspicious* Activity Reports, not I Have Hard Evidence Reports.

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Replying to GHarr497688:
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By Learningvfast
06th Oct 2021 16:27

This is the director's own company. We can't see how they would delegate the responsibility of their duties to junior staff. The director has sole access to the bank account and there have been 100s of transactions in the period. The director alone has used the only debit card for numerous company purchases.

Furthermore there is evidence to suggest the director has been in the store on multiple occasions.

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By Matrix
06th Oct 2021 16:30

Full or flexible furlough? If you want to create work for yourselves then ask to check the calculations.

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Replying to Matrix:
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By Learningvfast
06th Oct 2021 16:38

The payroll bureau have already confirmed that they are all full claims.

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By Matrix
06th Oct 2021 16:50

This is disappointing, especially if he has gone against your advice. I would call or email your findings and suggest an adjustment is made for the hours worked and send a link on how to repay. Ask for the adjustment once calculated so you can finalise the accounts. Advise that you will also need to look into any disclosures on the CT600. Surely the adjustments won’t be so huge for him to object.

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Replying to Matrix:
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By Learningvfast
06th Oct 2021 17:10

I think you have summed it up nicely - disappointment. If they agree to repay then fine, the problem lies if they refuse and then we are left with (what we believe) are overclaimed grants.

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By the_drookit_dug
06th Oct 2021 20:20

If he's at it, then claiming full furlough while still trading must count amongst the most stupid frauds ever. Especially when flexi-furlough was an option.

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Replying to the_drookit_dug:
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By Paul Crowley
06th Oct 2021 20:37

HMRC could have a field day if only they had some people who could be bothered to work in the office
How many directors and directors wives on full furlough despite company still receiving money
How many wives on full furlough start to finish
Not once even reading an email?
But then did they ever actually do any work for the last 10 years?
Just using that as a basis staff costs to HMRC would be repaid 20 times over.

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