Management and administration of FFS Furlough Flexible Scheme paperwork has never been more critical.
On Friday 12th June 2020, HMRC set out new processes, eligibilities and administrative requirements for companies to comply to, when accessing the Furlough scheme. These include the new FFS Furlough Flexible Scheme.
New changes to the scheme include the provision for employers to be more flexible in staging the return of employees from furlough. One obvious feature is the ability for employees to return on a part time basis, over a set period of time.
The Coronavirus Job Retention Scheme, more commonly referred to as ‘Furlough’, was created by HMRC to support businesses financially, in a bid to save jobs and reduce unemployment. You can read more about the initial scheme here.
Unfortunately, it has also come to light many businesses have either misused the scheme, or have not followed the correct procedures when processing claims. This means employers could become liable to repay thousands of pounds, putting businesses and employees jobs at risk.
Fraudulent claims, incorrect information and poorly administered furlough paperwork, have forced the Government to review The Finance Bill and provide HMRC with more power to pursue and investigate Furlough fraud.
With many new changes coming into force from 1st July to 31st October 2020, including the FFS Furlough Flexible Scheme, it has never been more important to ensure you are administering the scheme correctly.
Latest Furlough Updates and Processing requirements
- A new written agreement will need to be issued detailing what hours the employee will work.
- If this changes after a couple of weeks, a new agreement needs to be issued for each change – evidence of these changes need to be kept for 5 years.
- Keep a record of hours worked and hours furloughed – records of this need to be kept for 6 years.
- For HMRC audit purposes, keep details of the claimed amount, your claim reference number, and your calculation.
- If an employee was furloughed but is now back in work (on any hours), the employee would need to be furloughed for a further 3 weeks to access the FFS, however this only applies until 1st July 2020. After 1st July 2020, there will be no requirement for a 3-week furlough period before the FFS is accessed.
- All CJRS and FFS claims need to be made for the same calendar month of claim – you can no longer cross months, and they must be for a minimum least 7 days with the only exception being a claim for the first or last day of the month; and
- From 1st July 2020, the maximum number of employees you can claim for is the maximum you have previously claimed for e.g. if between April and June you claimed for 5, 10, 6, then from July the maximum you could claim for is 10.
New HMRC Powers
The Finance Bill is being amended to give HMRC power to pursue:
- Fraudulent claims
- Incorrect information
- Employers who made employees work despite claiming furlough
- Employers who didn’t pass on the payments to staff
- Traded profitably and didn’t need but claimed CJRS payments
- 100% tax on payment made
- If businesses fail to repay, then HMRC can prosecute employers
- There is a 30-day window for employers to repay anything claimed in error
The burden of proof may shift onto employers to prove they didn’t break the rules after looking at previous tax year and this tax year.
In order to ensure your business is not at risk, you should ensure you have all furlough paperwork and documentation compliant and up to date.