COVID-19 aid receipt audits: How to prepare?

Although the COVID-19 pandemic is no longer the latest issue, with increasing pressure on public budgets, we can expect more and more frequent launches of audits on the use of benefits and aids related to the COVID pandemic. Whether it concerns aid from all Antivirus programmes, or subsidies from support programmes such as COVID Nájemné (rents), COVID Ubytování (accommodation) and others, in principle the use of this aid can be audited for 10 years after it has been granted.

On the basis of the audits already completed, it is evident that the control authorities will focus on general problem areas, such as the issue of the timeliness of social security and health insurance contributions when receiving aid from the Antivirus programme. A large number of businesses have made numerous errors on these points. This will oblige them to repay all or part of the aid granted. There are therefore concerns that the audits will indeed be conducted on a large scale, often resulting in the levying of a charge for the breach of budgetary discipline and related charges.

Your options during an audit

However, the information stated above does not mean that you cannot defend yourself in the expected audits. In some cases, in our opinion, the control authorities act contrary to the established case law of the Supreme Administrative Court, which clearly states that the sanction must correspond to the seriousness of the violation of the conditions for granting the subsidy: “In determining the amount of the levy for the breach of budgetary discipline, it is necessary to apply the principle of proportionality, i.e. a reasonable relationship between the severity of the breach of budgetary discipline and the amount of the levy imposed for it.” Therefore, if it is accepted that even minor administrative errors are sanctioned by the obligation to repay the entire aid, it is impossible to speak of an appropriate (proportionate) procedure of the control authorities. The fact that the amount of the levy is sometimes set directly in the decision to grant the aid does not make any difference.

In addition, however, it should be borne in mind that even the statutory levy for the breach of the conditions of the COVID-19 benefit can be dealt with. In particular, Instruction No. GFD-D-52, by which the General Financial Directorate sets out the rules for the waiver of levies for the breach of budgetary discipline and the related sanctions, will be important in this regard. In some cases, it will be possible to exempt the entire levy, in others, for example, only the penalties.

Finally, it is possible to prepare for the audit. Administrative formalities will often be checked, therefore it is necessary to collect all documents that may be subject to the audit. Tracking these down (e.g. sick leave documents proving the eligibility for the Antivirus aid) might be challenging in hindsight. We thus recommend that you start preparing for the expected audits as early as possible.

COVID-19 Subsidies and investment incentives dReport newsletter

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