MP’s Question HMRC on Scope of Job Retention Scheme

The Treasury Select Committee met remotely on Wednesday 8 April to take evidence from HMRC on the economic impact of coronavirus. The witnesses were Jim Harra, First Permanent Secretary and Chief Executive of HMRC, and Cerys McDonald, Director of HMRC’s COVID-19 policy co-ordination. Mel Stride, Conservative, is chair of the committee.

We have selected some key points to note from the discussion that took place that may address some of your current concerns.

Clarification of the rules underpinning the JRS

  • It was confirmed that under the scheme, employees could be furloughed for a minimum three-week period. During this period, they should not carry out work for their employer. They can undertake training (provided it does not produce a product for their employer to sell), work for other companies during this time or volunteer, e.g. for the NHS.
  • Harra said that he was aware of instances where employees have reported being asked to undertake work during their furlough period. As this goes against the intentions of the scheme, HMRC have introduced an online ‘hotline’ to allow employees to report abuses of the scheme.
  • In instances where employers have been found to be in breach of the scheme, Harra said that HMRC had the ability to prevent them from receiving furlough payments (which could be returned if they had already been paid). He added that HMRC also had the ability to enforce criminal penalties in cases where businesses ‘knowingly try to defraud’ the job retention scheme.

It was stated that there are four levels of protection built into the scheme to prevent abuse. These are:

  • The policy design, which ensures employees are eligible for the scheme only if they were on payroll by 28 February (this allows HMRC to use existing payroll systems and employee details).
  • Online protections, requiring employers to prove their credentials in order to make a claim via the HMRC website.
  • The ability of employees to contact HMRC if they have evidence of employers abusing the scheme.
  • Wider downstream secondary checking and verification capabilities.

Workers who had left employment on or before the 28th February or were due to start a new job in March

  • HMRC had made arrangements for employers to be able to take back recently departed staff that they could then place on furlough.
  • However, for those who were due to start work after 28 February, he confirmed that they would not be eligible for this particular scheme, but that they could access tax credits and Universal Credit (if eligible) as an interim measure.
  • Harra also confirmed that the scheme was not designed to allow employers to part-furlough workers by reducing their hours. He also said that if employees were asked to return to work earlier than the initial three-week period, they would have to be restored to full salary.
  • Both Harra and McDonald confirmed that HMRC were engaged in discussions to ensure that furlough payments took into account those on maternity leave and other ‘labour market complexities’ that may have an impact on the operation of the scheme.

Timing of the roll out of the JRS

  • There was some concern expressed in the confidence in HMRC’s ability to roll-out this project and ensure that it is ready to begin making payments to employers before the end of April.
  • It was confirmed that the system was being live tested with a ‘select number of employers’. The system is expected to be able to cope with the ‘very large volume of claims that are expected’.
  • Following live testing, the next step in the roll-out of the scheme will be to ensure that a support package is in place to help employers to use it themselves, with little or no need for HMRC support.
  • The scheme is expected to be operational on 20 April to enable employers with payroll obligations at the end of the month to access payments. It was also confirmed that HMRC will do everything that they can to provide help and support to employers in need of support. This will include extra support for around 600 businesses without access to online facilities and for employers using bureaus to provide their PAYE processes.
  • To help ensure that HMRC is ready to deal with enquiries, Harra confirmed that a total of 5,500 staff would be deployed to this work. In addition to support from its private sector contractors, he said that HMRC was working with the Chartered Institute of Taxation and ICAEW to ensure their members were updated and able to provide support to their clients.
  • Harra said payments should follow four to six days after a claim has been submitted. Employers will be able to make claims 14 days in advance of running their payroll and it has been designed to accommodate different pay periods (i.e. weekly or monthly).

 

Practical operational guidance will also be published this week setting out how employers can get ready to access the scheme when it goes live. This will include instructions on how they can compile their claims in advance.

 

If you would like further guidance or support on this matter or require advice on other people management matters please contact Clover HR on 0121 516 0299 or email us at info@cloverhr.co.uk

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