The latest on the Furlough Scheme & Furlough Fraud!
HMRC has published its eagerly awaited update to the Coronavirus Job Retention Scheme (CJRS).
No major surprises, it broadly reflects what the Chancellor had previously announced. The key points to be aware of are as follows:
- From 1 July, employers can only furlough employees who have already been furloughed for the minimum 3 week period, meaning that if you had not placed an employee on furlough by 10 June, it is now too late to furlough that individual.
- The only exception to the above is that an employer (who has already used the furlough scheme for eligible employees) can place an employee returning from maternity, adoption, paternity, shared parental or parental bereavement leave on furlough leave.
- From 1 July, the minimum 3 week furlough period will no longer apply (the period will be 1 week) and employers will be able to use “flexible furlough”.
- Flexible furlough allows an employee to work part time for their employer and remain on furlough for any hours not worked. For any period the employee works, the employer will be responsible for the salary costs, whereas the CJRS will cover any hours not worked. If an employer wishes to use flexible furlough it must put in place a written flexible furlough agreement.
- The CJRS will be slowly wound down from July, and it will close on 31 October 2020.
- From 1 August, employers will have to pay employer National Insurance contributions and employer pension contributions.
- From 1 September, employers will also have to pay 10% of wages, with the CJRS paying 70% (capped at £2,187.50).
- From 1 October, employers will have to pay 20% of wages, with the CJRS paying 60% (capped at £1,875).
In other news, in an article published on its website today, the BBC reports that it has been told by HMRC that it has received more than 3,000 reports of “furlough fraud” since April. A key complaint would appear to be employees being asked to work by their employers whilst they are furloughed (which, as we all know, is not allowed).
HMRC has stated that it is treating reports of furlough fraud extremely seriously, and is taking action to tackle fraudulent and erroneous claims.
Draft legislation is currently winging its way through Parliament which, if passed, would give employers a 30-day amnesty period within which they can notify HMRC if they consider that they have misused the CJRS. The draft bill also gives HMRC the power to check that grants made to employers have been used correctly, and to raise an income tax assessment to reclaim monies which it decides have been either overpaid or misused.
Notably, the bill also contains a power for HMRC to charge a financial penalty where an employer is found to have deliberately misused the CJRS (the penalty would only be charged if an employer did not notify HMRC of its misuse within the 30-day amnesty period).
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If your business needs legal support with any issues arising from COVID-19, please get in touch with Sophie Clarke.
All information in this update is accurate at the time of writing. It is meant for general information only and is not legal advice.