Employers given 30 days to confess to furlough fraud

Employers given 30 days to confess to furlough fraud

Employers will be given 30 days to ‘confess’ to furlough abuses, with legislation being fast-tracked to allow HM Revenue & Customs (HMRC) to reclaim any furlough grant that is overpaid to employers, or that is not spent on wages as intended.

More than 2,000 employers have already been accused of furlough fraud by whistle-blowers, with HMRC expected to follow up targeted investigations with random compliance checks.

The draft legislation mentions ‘deliberately’ making an incorrect claim or ‘deliberately’ not using the money to pay furloughed employee costs, which should give some reassurance to any businesses that may have inadvertently submitted a claim incorrectly.

The recent update to the Coronavirus Job Retention Scheme (CJRS) also stated that the claims portal will allow employers to declare mistakes made in previous claims, and offset the over-claim against their next claim.

Guidance to the CJRS has been updated by the Government regularly, but it has always been made clear that if employers are using the scheme, then the furloughed employee must not do any work for them, which remains the case until the new Flexible Furlough rules are introduced on 1 July.

If an employer has asked an employee to carry out any work, then they will need to prove that whatever they asked them to do was neither;

  • Making money for them or any other businesses that may be linked, or;
  • Providing services to them

HMRC may find it difficult to determine the employers who have submitted inaccurate claims accidentally, through negligence or a misjudgement.

This is why it is important that all employers that have used the CJRS now review the claims that they have made to ensure that they have submitted the correct claims for each individual.

HM Revenue & Customs clarifies repayments of Corporation Tax and anticipated losses

HM Revenue & Customs clarifies repayments of Corporation Tax and anticipated losses

With businesses across many sectors having been hit hard by the Coronavirus crisis, HM Revenue & Customs (HMRC) has now said it will, in exceptional circumstances, consider claims for Corporation Tax repayments for prior periods based on anticipated losses, even before the conclusion of the current accounting period.

The clarification came in an update to HMRC’s internal Company Tax Manual.

Repayment of Quarterly Instalment Payments (QIPs) will require companies to submit evidence in support of claims and to demonstrate the amount of the losses they expect to incur.

Similar measures are in place in respect of the repayment of Corporation Tax paid on the normal due date for payment, which tends to be nine months and one day following the end of the accounting period.

The guidelines make clear that repayments will only be made in exceptional circumstances and that claims will be made based on the specific circumstances of each application.

While certain sections of the guidance are redacted, the Institute of Chartered Accountants in England and Wales (ICAEW) suggest that businesses provide the following information to HMRC in support of an application:

  • Up-to-date profit and loss forecasts
  • Management accounts and tax calculations
  • Details reasoning and assumptions underpinning the figures submitted
  • Reports from the Board of Directors and public statements concerning the company’s trading position
  • Evidence that the forecasts submitted are the same as those used for internal planning
  • Confirmation that the company does not expect exceptional income or gains during the current accounting period
  • External evidence demonstrating the circumstances involved are unlikely to change in the short term.

The issues involved in claiming repayments of Corporation Tax are complex and the evidence requirements are stringent, meaning the seeking of professional advice in advance of any claim is vital.

Remember to reinstate your VAT direct debit in time for your next payment

Remember to reinstate your VAT direct debit in time for your next payment

If you are using the option to defer VAT payments due between 20 March 2020 and 30 June 2020 and you have cancelled your direct debit, you should now ensure that you reinstate your direct debit in enough time for HM Revenue & Customs (HMRC) to take your next payment.

After 30 June 2020, you will need to make your VAT returns and payments as usual and on time.

However, you still have until 31 March 2021 to make any VAT payments you deferred between 20 March 2020 and 30 June 2020. It is up to you whether to pay this amount in a single instalment or several instalments.

Meanwhile, it has emerged that some businesses that have deferred their VAT payments between 20 March 2020 and 30 June 2020 have received ‘failed interim payment’ letters from HMRC. The letters were sent out in error and also include the wrong telephone number, which should be: 0300 322 7873.

If you have deferred your VAT payment and have received such a letter, you may wish to clarify with HMRC by telephone that you have not paid because of the VAT deferral provisions.

Government publishes new ‘Covid Secure’ guidance

Government publishes new ‘Covid Secure’ guidance

The Government has published new ‘Covid Secure’ guidance following the announcement that businesses in England including pubs, bars, restaurants, hair salons, barbers, hotels and bed and breakfasts may reopen from 4 July 2020.

The latest documents, prepared by the Department for Business, Energy and Industrial Strategy (BEIS) with input from the devolved administrations in Wales, Scotland and Northern Ireland, cover the following workplaces and working arrangements:

  • Close contact services, such as hairdressers, barbers, beauticians, tattooists, sports and massage therapists, dress fitters, tailors and fashion designers;
  • Hotels and other guest accommodation;
  • Restaurants, pubs, bars and takeaway services;
  • The visitor economy, such as indoor and outdoor attractions, business events and consumer shows.

Amongst the most eye-catching specific measures contained in the new guidance documents are:

  • Keeping a temporary record of customers and visitors for 21 days in restaurants, pubs, bars and takeaway venues;
  • Encouraging the use of apps for ordering;
  • Implementing staggered entry times to hospitality venues;
  • Reconfiguring seating arrangements and introducing one-way systems around hospitality venues;
  • A prohibition of live music and comedy;
  • Barbers and hairdressers should wear plastic visors when working in close proximity to clients.

The new documents add to those published in May, some of which have been updated to reflect the changed one metre plus social distancing guidance:

  • Construction and outdoor work
  • Factories, plants and warehouses
  • Homes
  • Labs and research facilities
  • Offices and contact centres
  • Shops and branches
  • Vehicles

The existing guidance documents and the new guidance documents for sectors reopening on 4 July are based on the following five principles, which have been tweaked since they were first published:

1. Carry out a COVID-19 risk assessment

Before restarting work you should ensure the safety of the workplace by:

  • carrying out a risk assessment in line with the HSE guidance
  • consulting with your workers or trade unions
  • sharing the results of the risk assessment with your workforce and on your website

2. Develop cleaning, handwashing and hygiene procedures

You should increase the frequency of handwashing and surface cleaning by:

  • encouraging people to follow the guidance on hand washing and hygiene
  • providing hand sanitiser around the workplace, in addition to washrooms
  • frequently cleaning and disinfecting objects and surfaces that are touched regularly
  • enhancing cleaning for busy areas
  • setting clear use and cleaning guidance for toilets
  • providing hand drying facilities – either paper towels or electrical dryers

3. Help people to work from home

You should take all reasonable steps to help people work from home by:

  • discussing home working arrangements
  • ensuring they have the right equipment, for example remote access to work systems
  • including them in all necessary communications
  • looking after their physical and mental wellbeing

4. Maintain 2m social distancing, where possible

Where possible, you should maintain 2m between people by:

  • putting up signs to remind workers and visitors of social distancing guidance
  • avoiding sharing workstations
  • using floor tape or paint to mark areas to help people keep to a 2m distance
  • arranging one-way traffic through the workplace if possible
  • switching to seeing visitors by appointment only if possible

5. Where people cannot be 2m apart, manage transmission risk

Where it’s not possible for people to be 2m apart, you should do everything practical to manage the transmission risk by:

  • considering whether an activity needs to continue for the business to operate
  • keeping the activity time involved as short as possible
  • using screens or barriers to separate people from each other
  • using back-to-back or side-to-side working whenever possible
  • staggering arrival and departure times
  • reducing the number of people each person has contact with by using ‘fixed teams or partnering’

Businesses and organisations with more than 50 employees reopening from 4 July, and those already open, are expected to publish their risk assessments online, while all employers are expected to display a signed poster, which can be downloaded with the guidance here  https://assets.publishing.service.gov.uk/media/5eb97d30d3bf7f5d364bfbb6/staying-covid-19-secure.pdf. This includes contact details for the Health and Safety Executive.

The guidance documents relate to workplaces rather than sectors, meaning employers may need to have regard to more than one set of guidance in their risk assessments and reopening plans.

For instance, the guidance for close contact services, vehicles and working in other people’s homes could be relevant to a mobile hairdressing service.

Employees returning from parental leave continue to be eligible for furlough scheme

Employees returning from parental leave continue to be eligible for furlough scheme

Employees returning from statutory maternity and paternity leave in the next few months will remain eligible for furlough through the Coronavirus Job Retention Scheme (CJRS).

Since 10 June, it has no longer been possible to furlough an employee for the first time, with the Government set to introduce part-time furlough from 1 July onwards. To facilitate this, the scheme will only be available to employers that are using the CJRS and employees that have previously been furloughed.

Because workers must complete 21 days of furlough to be eligible for part-time furlough, this means that the cut-off date for employees to be placed on furlough leave was Wednesday 10 June.

However, employees returning from parental leave will be eligible for the CJRS as they return to work, with further details set to be announced by the Government imminently.

The CJRS has helped more than one million employers so far, with more than one quarter of the UK workforce being furloughed.

Rishi Sunak, Chancellor of the Exchequer, said: “When I announced these changes to the furlough scheme last month, I was clear that we wanted to do this in a fair way, that supports people back to work as the country begins to re-open following coronavirus.

“But for parents returning from leave, their circumstances has meant that they are still in need of support, and I’m pleased that they will be able to receive the financial assistance they and their family will need.”

Whistleblowers make almost 2,000 allegations of furlough fraud

Whistleblowers make almost 2,000 allegations of furlough fraud

Figures show that almost 2,000 allegations of furlough fraud have been made by whistleblowers against employers, with HM Revenue & Customs (HMRC) expected to impose steep penalties on businesses and directors found to have abused the scheme.

Such claims come in several forms, including requiring furloughed employees to work, failing to pass the full value of the grant to the employee and backdating claims to include periods when the employee was, in fact, working.

Draft legislation published by the tax authority indicates that retrospective auditing of the Coronavirus Job Retention Scheme will be rigorous with severe penalties for employers found to be in breach of the rules.

The proposed legislation provides for HMRC to raise Income Tax assessments to recover amounts wrongly claimed from the scheme and to charge penalties in instances of deliberate wrongdoing.

Significantly, the legislation also contains provisions for holding company directors jointly and severally liable for any breaches.

Guidance on exceptional circumstances for higher rate SDLT refunds updated

Guidance on exceptional circumstances for higher rate SDLT refunds updated

HM Revenue & Customs (HMRC) guidance that sets out the exceptional circumstances allowing homeowners to claim higher rate Stamp Duty Land Tax (SDLT) refunds beyond the usual timeframes has been updated.

The updated guidance means that homeowners in England and Northern Ireland can now claim a refund in respect of the three per cent higher rate of SDLT in circumstances when their previous home was not sold within the usual time limit of three years, as long as the three-year period ended on or after 1 January 2020.

To qualify for the refund, the previous home must have failed to sell for reasons outside of the homeowner’s control and these reasons can now specifically include “the impact of coronavirus (COVID-19) preventing the sale”.

Trade Credit Insurance backed by £10 billion guarantee

Trade Credit Insurance backed by £10 billion guarantee

The Government will provide up to £10 billion of guarantees to Trade Credit Insurance schemes for business-to-business transactions.

The spending commitment, known as the Trade Credit Reinsurance scheme, has been agreed following extensive discussions with the insurance sector.

The new scheme will be available temporarily for nine months and backdated to 1 April 2020 for insurers operating in the UK market.

Due to Coronavirus and businesses struggling to pay bills, there was a concern that credit insurance might be withdrawn or premiums increased to unaffordable levels for some businesses, which would cause serious issues for liquidity and working capital across business supply chains.

The substantial guarantee will help to support supply chains and businesses during the coronavirus pandemic allowing them to trade with confidence, safe in the knowledge that they will be protected if a customer defaults or delays on a payment.

This important form of insurance covers hundreds of thousands of business-to-business transactions every year. More than £350 billion of economic activity of more than 630,000 businesses in the UK is underwritten by Trade Credit Insurance.

Under the scheme rules, participating insurers must comply with certain undertakings regarding the conduct of their business during the period of the scheme including conditions that they will forgo profits and not pay dividends or bonuses for senior staff for their guaranteed Trade Credit Insurance business.

Implementation of the scheme will be subject to state aid approval, agreement of full form documentation with insurers and acceptance of applications from insurers for participation.

VAT deferral refund available

VAT deferral refund available

Taxpayers that wished to defer VAT payments, but did not cancel their Direct Debits in time can claim a refund, according to HM Revenue & Customs (HMRC).

The tax authority has confirmed that taxpayers that intended to defer VAT payments due between 20 March 2020 and 30 June 2020 that were unable to cancel their Direct Debit to HMRC could now do so.

To obtain a refund, taxpayers should submit a Direct Debit Indemnity Claim to their bank. On this submission, all they must state is that they want to claim a refund under the Direct Debit Indemnity Scheme (DDI) and HMRC has said it will honour the request.

HMRC has also said that there will be no time limit in making this request, but businesses are encouraged to do so soon to obtain a quicker refund.

Taxpayers can also request repayment from HMRC directly rather than contacting their bank, but they must ensure that their bank details are updated using the tax authority’s online service.

Due to COVID-19 restrictions, Payable Orders are not being issued and it may take up to 21 days for a refund to be received if the Direct Debit Indemnity Claim process is not used.

HMRC is due to provide further guidance on the payment of tax at the end of the deferral period next March.

Businesses also need to make arrangements to pay VAT falling due from 1 July 2020 to 31 March 2021.

Government delays VAT Reverse Charge

Government delays VAT Reverse Charge

The Government has announced that the controversial VAT Reverse Charge rules for the construction sector will be delayed until 1 March 2021 due to the Coronavirus pandemic.

The VAT Reverse Charge rules, which effectively transfer the responsibility of paying VAT from a supplier to the business using their services, was originally due to come into force in October 2019 before being delayed for a year until October 2020.

Due to this latest extension, VAT-registered businesses and individuals that supply or receive specified services that are reported under the Construction Industry Scheme (CIS) will now have an additional five months to prepare for the complex new rules.

The Government has also introduced new amendments to the system as part of the delay. These will require firms that are end-users of goods and services to notify suppliers and subcontractors of their status.

HMRC introduced this change to ensure subcontractors are clear as to how to treat VAT payments and charges.

For further details on the rules surrounding the VAT Reverse Charge, please click here to read the Government’s latest guidance.

Despite the latest delay, it is recommended that those businesses that are likely to be affected by the change seek additional support now to make sure they are compliant when the scheme is introduced and not adversely affected by the new rules.