The Coronavirus Job Retention Scheme (CJRS) has been put into place to assist struggling businesses, allowing the employer to claim for employees that are unable to work because of the coronavirus and put on temporary leave (furlough).
The employer can claim 80% of the employee’s regular pay through the Coronavirus Job Retention Scheme, up to a monthly cap of £2,500.
Sounds great, but I’m concerned with the potential abuse the scheme will encounter and the reviews that the Government will put in place to stop criminals hoping to exploit the scheme. When the details were released about the scheme – who actually reviewed all the eligibility criteria, or in fact just noted the 80% claim of employees’ wages!
A few important notes to consider:
- Employees cannot undertake any work for employer while on furlough
- Both employee and employer must agree furlough
- Employer must confirm in writing that employee has been furloughed to be eligible to claim
- Any employer with a UK payroll and a UK bank account will be able to claim
- Employee must have been on the employer’s PAYE payroll before or on 19 March 2020 (just extended from 28 February)
- This scheme does not apply if you are self-employed
The fact is that all this money being provided to companies will need to be repaid at some point and I do have to wonder if people are acting ethically – if HMRC were to review the scheme in the next few years, would you be able to hold your head up and say you acted professional and ethically and thank the government for their support when required?
Whilst no doubt the vast majority of companies will use the scheme as intended, a small number will abuse the scheme and HMRC have the power to review individual claims.
How will the government protect and manage the scheme?
They will have the following protection:
- Scheme only relates to employees on the payroll as at March 19 – This means that the employee must have been already notified to HMRC through an RTI submission notifying payment in respect of that employee
- The Government portal system will only be used by employers and agents with the appropriate credentials
- The ability for people to contact HMRC and let them know if they have any evidence of any abuse
- Future checking with HMRC visits
I can’t see why in the future, HMRC couldn’t review all the companies that have applied for the scheme, reviewing documentation (VAT Returns, bank statements, invoices) correspondence, e-mail, letters, to ensure eligible and correct documentation was completed and confirms the employee was not working during the furlough period.
If inaccuracies with the scheme are discovered, the penalty will most probably be charged similar with other HMRC inaccuracies. Was reasonable care taken? Was the inaccuracy promoted or unprompted? Was it careless or deliberate? Depending on the behaviour, the actions could be considered as deliberate and concealed resulting in a penalty of 30% to 100% in addition to the amount actually claimed.
Please consider the scheme carefully and if you are eligible, please ensure the appropriate documentation has been completed and the employee is aware that no work is to be completed while furloughed. If you have any concerns or questions about the scheme – please do not hesitate to contact us here at Lambert Chapman LLP.
The views expressed in this article are the personal views of the Author and other professionals may express different views. They may not be the views of Lambert Chapman LLP. The material in the article cannot and should not be considered as exhaustive. Professional advice should be sought in connection with any of the issues contained in the article and the implementation of any actions.