OK, let’s try and get our heads around the latest changes to HMRC’s guidance on the Coronavirus Job Retention Scheme (CJRS).  It is becoming more and more important all of the time to keep on top of this because of:

The 29 May Updates

All of the below guidance pages were updated with information about how the Coronavirus Job Retention Scheme is changing, as per the Chancellor’s 29 May 2020 announcement that sees ‘Flexible furloughing’ from 01 July 2020.

The ‘Check which employees you can put on furlough to use the Coronavirus Job Retention Scheme’ guidance changed to include information about what pension trustees may do whilst on furlough and the eligibility of TUPE.

HMRC’s Penalty Regime

Shortly after the Chancellor had made the announcement about the CJRS changes, a consultation was issued by HMRC on empowering them to audit all COVID-19 business support schemes.  This includes the CJRS.  The consultation closes on 12 June 2020, shortly after which full details of the CJRS changes will be known.

There are three documents forming the consultation which will insert audit powers for HMRC into the Finance Bill 2020:

  1. The draft clause
  2. The draft explanatory note
  3. The draft Tax Information and Impact Note (TIIN)

Essentially, and importantly, the legislation will provide for an audit officer of HMRC to make an assessment whether they consider that an employer has received any Coronavirus support payment to which they are not entitled.  This is to do with protecting the taxpayer from possible fraudulent claims.  The audit process will allow HMRC to check that claims have not been overstated and that the scheme (CJRS) has only been used to pay wages and reimburse National Insurance and pension amounts.

There are significant penalties, such as the imposition of a 100% charge on the receipt of payments to which the employer is not entitled and which have not been used to pay wages and / or reimburse National Insurance and pension costs.  This is if HMRC can demonstrate that the employer has behaved deliberately.

The proposed legislation says that the correct operation of the CJRS will be as per the revised Treasury Direction issued on 20 May 2020.

Therefore, it seems as though regardless of when the employer’s intentions and the decisions were made, they will be penalised as per the latest guidance.  I am not aware that there is a precedent for making an announcement on which employers acted, only to find out at a later date that they may be penalised based on subsequent legislation and guidance.

Employers need to be aware of this future compliance activity that gives HMRC large audit powers.  Employers may also want to revisit their furloughing decisions and values being claimed.

The 7 Pieces of Guidance
The New ‘Direction’

Don’t forget that on 20 May 2020, HM Treasury published a revised ‘Direction’.  This is displayed on Gov.UK as ‘Further Treasury Direction made under Sections 71 and 76 of the Coronavirus Act 2020’.

The Guidance

There are 7 pieces.  As I have said before, employers have been furloughing for 2 months now and do not have the resources or energy to revisit decisions that have already been contractually made.  However, HMRC’s planned penalty regime may require this!

Guidance First Issued Last Changed Details of 05 June Change
Check if your employer can use the Coronavirus Job Retention Scheme 26 March 2020 05 June 2020

Information in the box at the top of the page updated with how the scheme is changing (nothing to write home about)

Contact HMRC information updated with the line ‘HMRC can only give you general advice and is unable to help you with a specific claim’

Check if you can claim for your employee’s wages through the Coronavirus Job Retention Scheme 26 March 2020 05 June 2020 Same change to the information box about the scheme changes – nothing exciting
Check which employees you can put on furlough to use the Coronavirus Job Retention Scheme 14 May 2020 05 June 2020 Same information box changes
Work out 80% of your employees’ wages to claim through the Coronavirus Job Retention Scheme 17 April 2020 05 June 2020

Same information box changes

Information and graphic inserted in the section ‘how to claim’

Information added about correcting an over-claimed amount in the next claim, functionality that has been added

HMRC are still working on functionality that will allow over-claimed amounts to be reported (and paid back) where there are no further claims

(Does this functionality allow amounts under-claimed to be reported and claimed as a grant?)

Examples for ‘Work out 80% of your employees’ wages to claim through the Coronavirus Job Retention Scheme’ 14 May 2020 22 May 2020 No changes!
Claim for wages through the Coronavirus Job Retention Scheme 20 April 2020 05 June 2020 Same information box changes
Reporting employees’ wages to HMRC when you’ve claimed through the Coronavirus Job Retention Scheme 23 April 2020 05 June 2020 Same information box changes
Summary

I expect the next changes will be to advise that the CJRS is entering ‘phase 2’ (from 01 July 2020) and more details will be available.

Regardless of HMRC’s penalty regime that will work on the basis that the 20 May 2020 Direction was full and final, please do keep copies of the guidance that you have based your furloughing decisions on.

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