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Following National Payroll week last week, our Managing Director Joss Lowery, reflects on the challenging year we’ve faced in the industry, and looks forward to the year ahead.

Clearly, the last 6 months have been a challenge bigger than many of us have ever had to face. I’m proud to say it’s a challenge that teams within the finance and payroll sector across the nation have more than risen too.

Businesses have been forced to adapt to new working conditions – both physically and technologically – and speaking from my own experience here at Bar2, the adaptability of our people has proved truly eye-opening.

If you’ve worked in an area where large volumes of furlough payments have been made, I’m sure these are 4 words that send shivers down your spine.

The legislation and guidance surrounding the scheme took a long time to arrive, and when it did, it not only arrived on a Saturday but was subsequently amended over 50 times. The portal for reclaiming any payments then failed to open until 20th April, to then delay any refunds for 7 days post claim.

It’s most certainly been painful. But despite all of this, our amazing colleagues across the industry have made over £35billion in furlough payments.  Considering the circumstances, this is a miraculous achievement and a testament to all those involved in ensuring that people are able to continue to financially support themselves and their families through an unprecedented global pandemic.

Whilst we continue to praise those that administered the scheme, I believe we must also acknowledge the efforts of those involved in the development of software that allowed us to do so. Our software partners, My Digital Accounts delivered a seamless method for payments to be made and reported on, in an incredibly quick time frame - and also at great cost to their business. It’s easy to underestimate the power of partnerships that proved essential in delivering these payments and I therefore thank them wholly for their continued support.

Unfortunately, it is important to recognise that HMRC have suggested some have abused the scheme and are estimating an unscrupulous fraud rate of somewhere between 5-10%. HMRC have the right to audit the records behind CJRS payments for 6 years and have consequently confirmed this will be a major line of investigation for future enquiries. Whilst the furlough scheme has proved a life save for many, there will sadly, always be a number who take advantage and I am sure we will hear more of some of these issues in the future.

Off Payroll working and IR35

Looking forward to the next 6 months, the industry is set to be challenged further by another shift in legislation and ultimately an increase in responsibility. Many are under the impression that the IR35 legislation is changing - it is not. What is changing is simply who is responsible for status determination.

Many businesses are being expected to make complicated tax status decisions that - if using case law as a guide - even HMRC are often victim of misjudging. In response to this increase in risk, businesses are erring on the side of caution at a time where even more than ever, the UK requires a flexible workforce who can bring the country up to speed following Covid-19.

Outsourcing these decisions can provide business with the protection they require whilst maintaining a flexible, complaint workforce. All is not lost, as ever proper planning and partnerships can help us all adapt and thrive.

Although not explicitly payroll, Brexit brings with it a challenge that will undeniably affect the industry hugely. Additional data will be required surrounding a European’s settled status, and I’m sure that payroll departments across the country will ultimately need to be involved in the application for visa sponsorship of EU nationals in the roles where we have the largest amounts of skills shortages.

All of this requires a huge amount of adaptability for payroll professionals like no other recent period, and challengingly it lies during a period where businesses themselves are in a pressured economic environment with increased revenue scrutiny.  

I am absolutely certain we will rise to the challenge, and that the future looks very bright for our amazing industry. We have already proved that we can adapt time and time again to whatever the economy throws at us, and I am positive that we will continue to thrive over the coming years.