Confess To Furlough Abuses

Legislation is currently being fast tracked through to law to allow HMRC to reclaim any furlough money overpaid to employers, or not spent on wages as intended. The legislation talks of ” deliberately ” making an incorrect claim, so should protect the innocent errors due to misunderstandings.

There are 2,000+ employers who have currently been reported to whistleblowing hotlines for furlough fraud. These will be at the top of HMRC hitlists but random compliance checks should also be expected.

Whilst guidance on the scheme has been regularly updated, what has been crystal clear from the outset is that if the employer made a claim then the employee could do NO WORK whatsoever for the employer, or linked employers, until flexible furlough is introduced from 1st July.

Now is the time for employers to re visit the claims that they have made.

The draft legislation states that penalties will apply if the employer fails to notify HMRC about the situation and any incorrect claim within 30 days. It also goes on to add that company officers ( directors and secretaries ) will be personally liable.

Our advice is if you have made a claim, then this should be reviewed by comparing the claim to the guidance freely available on the government website and/or on ACAS website, and checking the accuracy and validity of the claim. If an error is identified, then this should be notified to HMRC without delay.

Self Employed Income Support Scheme Extension

The self employed scheme has now been extended, to allow eligible businesses ( self employed individuals or partners in a self employed partnership ) to claim a second and final grant if the business has been adversely affected by Covid 19 on or after 14th July 2020. The claim can be made in August, and it does not matter if the first grant was not claimed.

A claim for the first grant must be made on or before 13th July 2020.

A claim can be made if all of the following conditions apply : you traded in 2018/19 and submitted your tax return by 23rd April 2020 for that year; you traded in 2019/20; you intend trading in 2020/21; your trade has been adversely affected by Covid 19.

Adversely affected could include being shielded, self isolating, sick because of Covid 19, have care responsibilities because of Covid 19, supply chains are interrupted, you have fewer customers, your staff cannot work.

You can check your eligibility for the scheme at www.tax.service.gov.uk/self-employment-support

The first grant is worth 80% of the average monthly trading profits covering 3 months worth of profits capped at £7,500 in total. The second grant is worth 70% of the average monthly trading profits covering a further 3 months worth of profits capped at £6,570 in total. These grants constitute normal taxable trading income.

Domestic Reverse Charge Delayed

The introduction of the domestic reverse charge for construction services will be delayed for 5 months from 1st October to 1st March 2021, because of the impact of the coronavirus pandemic on the construction industry.

There will also be an amendment to the original legislation, to make it a requirement for businesses to be excluded from the reverse charge because they are end users or intermediary suppliers, they must inform their subcontractors in writing that they are the end user or intermediary supplier.

June 2020 Fuel Rates

New fuel rates apply with effect from 1st June 2020. For one month from the date of change either the new rates or the old rates can be used. For this purpose hybrid cars are treated as either petrol or diesel cars, and these rates can also be used for VAT recovery purposes, but employers need to keep VAT receipts. For a fully electric car, the rate is 4p per mile.

The new rates are :

Petrol : engine size 1,400cc or less 10p; 1,401 cc to 2,000cc 12p; over 2,000cc 17p.

Diesel : engine size 1,600cc or less 8p; 1,601cc to 2,000cc 9p; over 2,000cc 12p.

LPG : engine size 1,400cc or less 6p; 1,401cc to 2,000cc 8p; over 2,000cc 11p.