On 8 April 2020, the Treasury Coronavirus Select Committee considered evidence from HMRC on the Coronavirus Job Retention Scheme (JRS). A video of the session can be found here (a BBC login is required to access this). Jim Harra, First Permanent Secretary and Chief Executive, and Cerys McDonald, Director of CV-19 Policy Coordination, gave evidence on behalf of HMRC. The evidence focused primarily on the process for making a claim, eligibility criteria and the prevention of abuse of the scheme by employers. The key points are summarised in this update.
Making a claim
- HMRC indicated that it intends to publish practical operational guidance this week on how employers can prepare and upload claims under the JRS. We will provide a further update as and when this is published.
- The online system for employers to upload claims will be live from 20 April, to allow HMRC to begin making payments from 30 April, for companies where this is their payday. HMRC will pay money into the employers' bank accounts within four to six working days of receiving a claim.
- The system will be open 24/7 and there will be a “queuing” system where volumes are high. HMRC is confident that the system will cope with the high volumes expected.
There was further discussion about who will be eligible to receive payments under the JRS. The Treasury Committee focused primarily on the 28 February payroll cut-off date and the exclusion of those on reduced hours.
- HMRC reiterated that only employees employed on or before 28 February 2020 will be covered by the scheme.
- The government will not extend the scheme to include part-time or short-term working. This means that employees will not be eligible for furlough where they continue to carry out any work on behalf of their employers, even on a reduced-hours or reduced-pay basis. This is because the aim of the scheme is to protect people from redundancy and to enable them to return to their jobs eventually, rather than to supplement their pay.
- They confirmed that employers can rotate employees on furlough, subject to a three-week minimum furlough period for each employee.
- They confirmed that the calculation of a regular wage is based on the wage employers are obliged to pay, rather than discretionary payments.
- HMRC is reviewing its guidance, and we can expect further updates soon.
Preventing abuse of the scheme
The Treasury Committee emphasised the risk of abusing the scheme, and HMRC outlined mechanisms they will use to reduce this risk, including:
- Carrying out selective checks of companies, even after money has been paid, and recovering money paid to employers where they had no entitlement to it. It will consider criminal prosecutions in cases of fraud.
- Preventing high-risk payments from being made before they have been checked.
- Encouraging employees to contact HMRC where they suspect their employers of abusing the scheme.
We appreciate that this is a stressful and worrying time for our readers (and for so many), and we do hope that you find the guidance contained in this blog useful. If you are interested in formally engaging the firm and require further tailored advice in relation to what is covered, please contact Alice Yandle, Rosanna Gregory, or your usual contact at the firm on +44 (0)20 3375 7000.
Please note that our Employment team is currently experiencing a very high volume of queries in light of the COVID-19 outbreak, which unfortunately means that we are unlikely to be able to respond to informal queries of a more general nature, given the need to prioritise urgent queries from existing or new clients. We hope this blog is, however, helpful in addressing some of those more general queries.
This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.
© Farrer & Co LLP, April 2020